Stamp Duty and Stamp Duty Reserve Tax — power to make FMI sandbox related changes and exemption for PISCES
Published 30 October 2024
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Who is likely to be affected
Taxpayers and businesses involved in the buying or selling of shares traded on a Private Intermittent Securities and Capital Exchange System (PISCES) platform.
General description of the measure
The measure provides a power enabling HM Treasury to make Stamp Duty and Stamp Duty Reserve Tax (SDRT) changes in relation to financial market infrastructure (FMI) sandboxes, as established under the Financial Services and Markets Act 2023, by statutory instrument. This power will be used to provide an exemption for PISCES related transfers as announced at Autumn Budget 2024.
Policy objective
PISCES is a new type of trading platform that will allow private companies to have their shares traded intermittently, supporting private companies to scale and grow, and boosting the pipeline of future Initial Public Offerings in the UK.
Removing a Stamp Duty and SDRT charge will help increase the attractiveness and overall participation on a PISCES platform.
Background to the measure
The measure was announced at Autumn Budget 2024.
The regulatory framework for PISCES will be developed using a ‘financial market infrastructure sandbox’, as established under the Financial Services and Markets Act 2023.
A consultation on PISCES was launched in March 2024 by the previous government. In response to this, stakeholders have asked for clarity on the Stamp Duty and SDRT tax position.
A response to the March 2024 consultation will be published in due course, ahead of laying a statutory instrument before Parliament to establish the PISCES sandbox.
Detailed proposal
Operative date
The measure will have effect on and after the date of Royal Assent to Finance Bill 2024-25. This measure will be used by HM Treasury to make Stamp Duty and SDRT changes to a similar timeline to the legislation that will establish the PISCES regulatory framework.
Current law
The current law for Stamp Duty can be found in:
- The Stamp Duties Management Act 1891
- Stamp Duties Act 1891
- Finance Act 1895
- sections 67 to 2A Finance Act 1986
- Schedule 13 of Finance Act 1999.
Part IV of Finance Act 1986 sections 86 to 99 set out the main scope and charging provisions for Stamp Duty Reserve Tax (SDRT).
Proposed revisions
Legislation will be introduced in Finance Bill 2024-25 providing a power enabling HM Treasury to make Stamp Duty and SDRT changes in connection with any exercise of the time-limited ‘financial market infrastructure sandbox’ power in section 13 of the Financial Services and Markets Act 2023.
The power will be used by HM Treasury to introduce secondary legislation which provides an exemption from Stamp Duty and SDRT for transfers on a PISCES platform and for onward transfers to end purchasers which result from trading on a PISCES platform.
The exemption provided in secondary legislation will be time limited to the duration of the PISCES sandbox.
Summary of impacts
Exchequer impact (£ million)
| 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 |
|---|---|---|---|---|---|
| Negligible | Negligible | Negligible | Negligible | - 5 | - 5 |
These figures are set out in table 5.1 of Autumn Budget 2024 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Budget 2024. The figures are combined for Finance Bill 2024-25 legislation and forthcoming secondary legislation.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is expected to have a positive effect by helping to incentivise current private shareholders and potential investors to buy and sell shares through trading on a PISCES platform. Investors will gain better access to innovative companies, while also benefitting from greater transparency and efficiency than available in private markets.
The measure is not expected to impact on family formation, stability or breakdown.
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
The measure will have a negligible impact on businesses operating as stockbrokers in relation to administrative burden.
One-off costs will include familiarisation with the legislation and implementation of the changes into businesses processes and IT systems which deal with the transfer and settlement of securities.
Continuing costs to businesses in the normal day-to-day operation of the measure for PISCES when applying the exemption on related securities trading and settlement will be negligible.
Continuing savings could be realised by businesses as this will also remove any requirement to submit stock transfer forms to HMRC for stamping in relation to PISCES transfers, further reducing admin burdens for brokers.
Customer experience is expected to improve by reducing the admin burden of the requirement for stockbrokers to account for the Stamp Duty or SDRT that would have been due on purchases by their underlying clients (the end investors).
This measure is expected to have a positive impact on businesses whose shares will be traded on PISCES. It aims to incentivise the use of PISCES, which in turn will support companies to scale up and grow, providing liquidity, helping shareholders, including employee shareholders, to realise their gains, and providing an opportunity to companies to rationalise their shareholder base. Companies using PISCES may also find it easier to raise capital privately outside of the platform by being connected to a wider group of potential investors.
This measure is not expected to impact on civil society organisations.
Operational impact (£ million) (HMRC or other)
There are no operational impacts.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from external sources.
Further advice
If you have any questions about this change, contact the HMRC Stamp Taxes team by email: [email protected].