The Securities Transfer Tax will, from late 2027, replace the current Stamp Duty and Stamp Duty Reserve Tax. Picture by Kirsty O'Connor / Treasury
Industry experts have bemoaned a lack of reform for stamp duty on shares following Chancellor John Healey's Budget today (28 October).
Stamp Duty on shares was markedly absent from the chancellor's speech today but HM Treasury documents revealed that it is set to be replaced by late 2027 in an attempt to modernise the framework.
Previously described as a "single tax on transfers of securities" in July, the Securities Transfer Tax will, from late 2027, replace the current Stamp Duty and Stamp Duty Reserve Tax on shares (SDRT) as part of the government's Finance Bill 2026-27.
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Susannah Streeter, chief investment strategist at Wealth Club, said the "chancellor [was] missing an opportunity to make investing in UK shares more attractive".
"While the government has acknowledged that cutting stamp taxes on shares could help improve the competitiveness of UK capital markets, it has stopped short of taking action, opting instead for a technical overhaul that will leave the level of taxation unchanged," she added.
The chief investment strategist also noted that, at a time when confidence among wealthy investors is "worryingly low", the Budget could have been used to remove one of the barriers adding to the cost of investing in British-listed companies.
She continued: "Instead, investors will have to wait until late 2027 for a change in the way the tax is administered, with no reduction in the bill they face when buying shares."
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Isabella Galliers-Pratt, senior investment director at Rathbones, was more optimistic, arguing that the move was "one of the more encouraging takeaways from the Budget".
"At 0.5% on most share purchases, the tax looks increasingly anomalous in a world where capital moves across borders at the touch of a button and major competing markets such as the US have no equivalent general stamp duty," she said.
"Removing or reducing that cost could improve liquidity, make UK equities more attractive to global investors and provide a meaningful boost to a market that has spent too long fighting for capital. It is a relatively small lever that could have a disproportionately positive impact."
Richard Stone, CEO of the Association of Investment Companies (AIC), was more dismissive, especially given the AIC had previously campaigned for the scrapping of Stamp Duty on shares.
He said: "It is disappointing that the chancellor has not acted on stamp duty. It is a missed opportunity to boost our stock market by cutting stamp duty on ISAs and pensions, if not removing it altogether.
"With the UK stock market under pressure, a lack of action continues to leave the door open to overseas bargain hunters."
