Stamp Duties

A. Introductory Note

This section presents data on the stamp duty payable upon documents, including many used in legal and commercial practice. Stamp duty reserve tax, which was introduced in 1986 and applies to certain transactions in securities which would not otherwise attract stamp duty, is also shown.
Payment of stamp duty is indicated by stamps put on the documents themselves following presentation to the Stamp Office or, where composition arrangements operate, through a printed indication on the documents of the amount or payment of the duty.

The main stamp duties are charged on the documents described below. The rates of duty vary with the type of document and the nature of the property. Stamp duty reserve tax is charged on minor transactions in securities.

Land (including buildings) on sale.

Conveyances and transfers of land and buildings are chargeable to stamp duty on the purchase price of a freehold property. The rates of duty which have applied since 1958 are set out in the table 'Rates of stamp duty': since March 2000 the rates have been from 1 per cent to 4 per cent depending on the purchase price. Stamp duty on sale is not payable if the price does not exceed a threshold value, currently £60,000. Where the price exceeds each threshold however, duty is charged at the appropriate rate on the whole purchase price, including the part below the threshold. Purchasing the remainder of an existing lease is treated in the same way as purchasing a freehold property.
Other property on sale.

Conveyances and transfers of other property, e.g. goodwill, patents and debt, are also chargeable on the purchase price. The rates of duty are the same as for land and buildings.
Leases.

Grants of new leases of land and buildings are charged on both the premium (the capital sum paid by the purchaser) and the average annual rent. The premium attracts duty as on a sale, but the £60,000 threshold applies unless the rent exceeds a certain level. The amount of duty payable on the average annual rent depends on the length of the lease.

Transfers on sale.

Transfers of stocks and shares are chargeable on the price of the shares, at a single rate, currently � per cent and with no threshold. Before 1984 the rate was 2 per cent but it was then reduced to 1 per cent. It was further reduced to � per cent from 27 October 1986. At the same time the duty was then widened to include certain transfers previously exempted including company takeovers and mergers, letters of allotment, purchase by a company of its own shares, and certain loan stock. A higher rate of duty - 1� per cent - is charged where shares are converted into depository receipts or transferred to a clearance service.
Stamp duty reserve tax.

Most transactions in securities now take place without an instrument of transfer, notably dealings in dematerialized shares such as within the CREST system. SDRT, introduced in 1986, applies to these transactions. It is charged at the same rate as stamp duty on paper transfers. It also applies to the purchase of securities registered in the name of a nominee who acts for both buyer and seller, and the purchase of securities which are resold before they are transferred to the buyer.

Capital duty. This 1 per cent duty on the raising of capital by companies was abolished from 15 March 1988.
Life insurance policies. Duty was payable at the rate of 50p per £1,000 of the sum insured. The duty was abolished from 1 January 1990.
Unit trust instrument duty. The duty of � per cent on the value of property put into a unit trust was abolished from 15 March 1988.
Bankers' composition. Banks in Northern Ireland could pay by composition stamp duty on bank notes issued by them. The duty was at 50p per £100 of the average value of notes in circulation each half year. The duty was abolished from 1 January 1992.
Voluntary dispositions. These were liable to duty as if they were conveyances or transfers on sale, with the substitution of the value of the property transferred for the consideration for the sale. Voluntary transfers to charities were exempted from duty from 1982 and the remainder in 1985.
Documents not classified. These are mainly those charged with fixed duties and consist largely of duplicate documents and deeds of trust. Since October 1999 the fixed duty has been set at £5.

Penalties. These are charged on documents submitted after the 30 day period permitted for submission after completion of the sale. Since 1 October 1999 interest can also be charged on late submission of document or delayed payment of duty. A de minimus limit of £25 applies to the interest charge

Requests for further information should be addressed to Peter Smedley, Analysis & Research, HMRC, West Wing, Somerset House, Strand, London WC2R 1LB. A telephone enquiry number for this section is given in the 'Update calendar and enquiry points' page.