In a recent move by HM Revenue & Customs (“HMRC”), it has been confirmed that the 1.5% charge on the issuance of UK shares into depositary receipt systems and clearance services will cease to apply starting from 1 January 2024. The change also impacts certain related transfers. This development has been marked by the publishing of a policy paper outlining the decision, accompanied by draft legislation.
This change is particularly significant as it could potentially result in a more lucrative environment for capital raising activities within the UK. The removal of these stamp duty and stamp duty reserve tax (“SDRT”) charges may attract more shareholders due to the reduced costs linked to the issuance of shares into depositary receipt systems.
Both depositary receipt systems and clearance services play a vital role in the ease of trading securities. They provide an indispensable service of simplifying the process of owning and trading shares, especially those based in foreign markets. Therefore, removing a hurdle such as the 1.5% stamp duty charge could result in a positive impact on the UK market’s accessibility and attractiveness for investors both local and international.
In the ever-evolving landscape of law and finance, it is essential for legal professionals engaged in corporate law and financial affairs not just to stay informed but also to anticipate changes and grasp opportunities. This development serves as another illustration of how regulations and policies are dynamically shifting and impacting the business environment.
A more robust discussion of these changes and their implications provided by law firm – Goodwin, can be found here. This decision by HMRC represents a case where regulatory shifts create space for potential investment incentives and modifications to established transaction structures.