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Stamp Duty on shares

When buying shares where the price paid is greater than £1,000, and the purchase is recorded on a stock transfer form, the form will need to be stamped by HM Revenue & Customs (HMRC) and Stamp Duty will need to be paid. The process to follow is explained below. For shares bought electronically, or without a stock transfer form, please read the guide 'Stamp Duty Reserve Tax'.

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Share transfers valued at £1,000 or less

If you buy stocks and shares for £1,000 or less you don't normally have to pay any Stamp Duty. You also don't have to tell HMRC about the transaction.

All you need to do is:

  • make sure the first exemption certificate on the back of the stock transfer form has been completed (you don’t need to complete this certificate if you don’t pay anything for the shares)
  • send the stock transfer form and the share certificate to the registrar of the company you've bought shares in - whether you gave anything for the shares or not

The address of the registrar is on the share certificate. The registrar will then issue you with your own share certificate.

Share transfers signed before 13 March 2008

The rules above have applied since 13 March 2008. If a share transfer with a value of £1,000 or less was agreed and signed before that date, it will need to be stamped by HMRC and you'll have to pay Stamp Duty.

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Stamp Duty on share transfers for more than £1,000

If you buy stocks and shares for more than £1,000 you will normally have to pay Stamp Duty. This means you have to send HMRC the stock transfer form for stamping, along with your payment.

Calculating how much Stamp Duty is payable

The amount of Stamp Duty you pay is based on the 'chargeable consideration' you give for the stocks or shares. The chargeable consideration can be:

  • cash
  • other stocks and shares
  • debt

You won’t have to pay Stamp Duty where the consideration you give is not chargeable. You can read more about exemptions by following the link below ‘Stamp Duty reliefs or exemptions and how to apply’.

You pay Stamp Duty at the rate of 0.5% of the value of the chargeable consideration, rounded up to the nearest £5, on each document to be stamped.

Example

Ben Harris buys shares using a stock transfer form. He pays £1,995.

The Stamp Duty rate is 0.5%. So £1,995 × 0.5% = £9.97. This is rounded up to the nearest £5, which means Ben pays £10 Stamp Duty.

You can use the HMRC Stamp Duty calculator to work out how much you have to pay.

Use the Stamp Duty calculator for stocks and shares

Stamp Duty reliefs or exemptions and how to apply

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Completing (certificates on) a stock transfer form

When you complete a stock transfer form you should give all the details of the sale including the shares being transferred, the consideration, the buyer and the seller etc.

If you don't give any consideration for the shares you should enter 'Nil' as the consideration money.

If the transfer is exempt from Stamp Duty or no chargeable consideration is given for the transfer you need to complete one of the certificates on the back of the stock transfer form. The certificate you need to complete depends on the facts.

When to complete Certificate 1

You should complete certificate 1 if both of the following applies:

  • consideration you give for the shares is £1,000 or less
  • the transfer does not form part of a larger transaction or series of transactions where the total exceeds £1,000

When to complete Certificate 2

You should complete the second exemption certificate on the back of the stock transfer form in the following situations:

  • the transfer is exempt from Stamp Duty, for example, transfers in connection with divorce or the dissolution of a civil partnership
  • the consideration given is not chargeable consideration

No certificate needed

You don't need to fill in either certificate where no consideration is given for the shares or if you are claiming a relief from Stamp Duty. If you are claiming a relief you will need to send the completed stock transfer form, together with details of the relief you are claiming to HMRC for stamping.

Read about 'Stamp Duty reliefs or exemptions and how to apply'

Applying to get your stock transfer form stamped

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Applying to get your stock transfer form stamped

You have to send the stock transfer form to HMRC for stamping within 30 days of the 'effective date' of the transfer. This is normally the date the form is signed.

When you send the stock transfer form to HMRC make sure that it is fully completed, signed and dated. You also need to include:

  • a covering letter that gives your address so the stamped documents can be returned to you. The letter should also quote your payment reference number if you've already paid the Stamp Duty using an electronic method (the reference number is the one that you've generated or chosen yourself)
  • a cheque made out to 'HM Revenue & Customs only' for the amount of Stamp Duty that's due - if you've not already paid using another method. Note the reverse of the cheque with any reference number you've generated or chosen yourself
  • any agreement and supporting documents if HMRC has given a formal opinion or adjudication on how much Stamp Duty you should pay

You can read more about getting an opinion from HMRC by following the link at the end of the section.

HMRC usually deals with stock transfer forms within five working days of receiving them. You should allow ten days to give them time to be returned by post.

Common errors that cause delays

There are a number of reasons why HMRC may reject your application. The most common ones are:

  • the stock transfer form is not dated
  • the Stamp Duty is not rounded up to the nearest £5 on each document
  • the consideration value is not shown on the form - remember that if shares are given as consideration you'll need to give the value of the shares

So it's worth checking that the form has been completed properly before sending it to Birmingham Stamp Office.

Birmingham Stamp Office contact details

Find out how to pay Stamp Duty including the benefits of paying electronically

Read more about getting an opinion from HMRC

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What happens once you've sent your form to HMRC?

HMRC usually deals with stock transfer forms within five working days of receiving them. But it's a good idea to allow ten days to give them time to be returned by post.

After you've received your stamped form back from HMRC you need to send it to the registrar of the company you've bought shares in, along with the share certificate. The address of the registrar is on the share certificate. The registrar will then issue you with your own share certificate.

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Urgent cases - 'same day' stamping service

The 'same day' stamping service is only available in exceptional circumstances. This could be unexpected or unforeseen circumstances when it is essential to have a document stamped immediately.

You can't use the same day service if the urgency could have been avoided by either party or their respective agents.

This is important when adjudication is a legislative requirement for stamping, either due to the claiming of a relief or for some other reason. In these circumstances same day stamping service will not be considered. HMRC expects the number of occasions when same day stamping service is required to be minimal.

If you become aware that a transaction may need an instrument stamped at short notice, you should write to the Stamp Duty Team giving as much detail as possible, including the:

  • number of instruments to be stamped
  • specific reason or reasons for the request
  • amount of Stamp Duty

In exceptional circumstances a request for the 'same day' stamping service can be made by contacting the stocks and shares 'same day' stamping service.

Contact details for stocks and shares 'same day' stamping service

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Penalties for late stamping and payment

You have 30 days after the stock transfer documents have been signed and dated to get them stamped and pay the Stamp Duty that's due. If you don't do this within the time limit you may be charged a penalty and interest.

Find out about Stamp Duty penalties and interest

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Reliefs and exemptions for share transactions

There are some share transactions that qualify for relief that can reduce the amount of Stamp Duty you pay. And there are some that are exempt from Stamp Duty altogether.

If you think you qualify for relief you'll need to apply to HMRC so that they can confirm it, otherwise you'll have to pay the full amount of Stamp Duty.

Transactions that qualify for relief include:

  • transactions between related companies - known as group relief
  • some company reconstructions and acquisitions
  • purchases of shares by charities

You can find out more about exemptions and the reliefs you can claim, how to claim them and what to include in your application by following the link below.

Stamp Duty reliefs and exemptions

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Getting an opinion on the amount to pay

When you send your documents to be stamped you must pay the correct amount of Stamp Duty (this may include penalties and interest payments). If you're not sure of the amount to pay you can ask HMRC for their opinion.

Read more about getting an opinion from HMRC

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Stamp Duty on UK shares bought from abroad

If you buy shares in a UK company while you're abroad, you still have to pay Stamp Duty and get the transfer documents stamped. If you don't do this within the time limits you may have to pay a penalty and interest.

If you buy foreign shares you don't have to pay Stamp Duty. If however you bring a share document into the UK transferring foreign shares there could be a charge to Stamp Duty. There may be other foreign taxes to pay.

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Enquiries about Stamp Duty

If you need any help with working out if you have to pay Stamp Duty, you can contact the HMRC Stamp Taxes Helpline.

Contact the Stamp Taxes Helpline

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More useful links

Stamp Duty Reserve Tax

Stamp Duty Land Tax

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