Widening access to the growth market exemption for Stamp Duty and Stamp Duty Reserve Tax
Published 22 November 2023
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This publication is available at https://www.gov.uk/government/publications/growth-market-exemption-for-stamp-duty-and-stamp-duty-reserve-tax/widening-access-to-the-growth-market-exemption-for-stamp-duty-and-stamp-duty-reserve-tax
Who is likely to be affected
Recognised growth markets, persons purchasing UK securities traded on recognised growth markets and companies seeking to admit their shares to trading on recognised growth markets.
General description of the measure
This measure increases access to the growth market exemption, which relieves trades made on a ‘recognised growth market’ from Stamp Duty and Stamp Duty Reserve Tax (collectively, Stamp Taxes on Shares). The measure allows those Financial Conduct Authority (FCA) regulated multilateral trading facilities (MTFs), run by investment firms, that are approved as ‘recognised growth markets’ by HMRC to access the growth market exemption without needing to be recognised stock exchanges.
This measure updates the market capitalisation condition for qualifying as a recognised growth market for the purposes of the exemption, by increasing the level up to which a majority of companies listed on the exchange can be capitalised from £170 million to £450 million.
Policy objective
This measure seeks to ensure fairness in the current application of the growth market exemption, increase competition in the market leading to greater choice for small and medium enterprises seeking to access finance and updates the conditions attached to the growth market exemption to reflect the modern market.
Background to the measure
This measure was announced at Autumn Statement 2023 and will be legislated for in Autumn Finance Bill 2023.
Detailed proposal
Operative date
This measure will have effect on and after 1 January 2024.
Current law
Current law is contained in section 99A Finance Act 1986.
Proposed revisions
Legislation will be introduced in Autumn Finance Bill 2023 to amend the conditions to qualify for recognition as a growth market in section 99A Finance Act 1986.
Summary of impacts
Exchequer impact (£ million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| Negligible | Negligible | Negligible | Negligible | Negligible | Negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure will impact on any individuals that purchase securities on any MTF run by an investment firm that applies, qualifies for and is approved for the growth market exemption by removing the 0.5% cost of Stamp Taxes on Shares per securities transaction. Individuals will not need to do anything as the exemption is automatically applied when the purchase is made.
This measure is not expected to impact on family formation, stability or breakdown.
Customer experience is expected to remain broadly the same as the change does not affect any current processes or tax admin obligations for individuals.
Equalities impacts
It is not anticipated that there will be impacts on those in groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is not expected to impact businesses or civil society organisations as it is anticipated that businesses who decide where to list their shares for trading, would consider the various benefits or the various markets that they could qualify for (for example, one of those factors might be whether the market offers the growth market exemption). It is expected that markets would advertise this rather than businesses having to find out for themselves via this measure, given it would be one of their selling points to get businesses to list with them rather than competitor markets.
The increase in companies market capitalisation level should allow companies that are over the previous £170 million but under the new level more choice in terms of whether they position themselves on a recognised growth market and access the growth market exemption or whether they look to list on a main market and opt for the benefits that come with that.
This measure is expected overall to have no impact on business’ experience of dealing with HMRC, as the change does not change any processes or tax admin obligations.
This measure is not expected to impact civil society organisations.
Operational impact (£ million) (HMRC or other)
There is no operational impact for HMRC. Systems to approve applications for recognised growth market status are already in place and we do not expect high numbers of additional applications. The current arrangements for recognised growth market compliance will continue to apply.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored using existing processes for the growth market exemption.
Further advice
If you have any questions about this change, please contact the HMRC Stamp Taxes Team by email: [email protected].