Securities Transfer Tax: A Welcome Simplification For LP Secondary Transactions?

The UK government has published draft legislation for a new Securities Transfer Tax (STT), which is expected to replace the existing stamp duty and stamp duty reserve tax (SDRT) regimes for transfers of securities.

The proposal is intended to modernise and simplify the UK’s stamp taxes on shares regime by replacing the current combination of paper-based stamp duty and agreement-based SDRT with a single, self-assessed, digital-first tax. The government is not proposing to change the main headline rate, with the principal STT charge expected to preserve the existing 0.5% charge on chargeable consideration.

For private capital sponsors, fund managers, secondaries investors and advisers, one of the most interesting aspects of the draft legislation is the proposed treatment of partnership interests. Very broadly, STT will apply to transfers of UK securities and interests in UK securities, but ordinary transfers of partnership interests should not be within scope merely because the