Moving shares between shareholders is the transfer tax a company director meets most often, and it is nothing like the land taxes that share its name. GOV.UK puts the charge at 0.5% of what you pay for the shares. Whether it arrives as Stamp Duty or as Stamp Duty Reserve Tax depends on how the transfer is done, and below a threshold the paper route carries no charge at all.
The rate, and which of the two taxes you are in
When you buy shares you usually pay 0.5% on the transaction. Bought electronically, the charge is Stamp Duty Reserve Tax and it is collected as part of the settlement. Bought using a stock transfer form, the charge is Stamp Duty and it applies only if the transaction is over £1,000. A higher rate of 1.5% applies where shares are transferred into some depositary receipt schemes or clearance services.
What the £1,000 threshold really means
It is not an allowance carved out of a larger price. Certificate 1 on the back of the stock transfer form is completed where the consideration is £1,000 or less and the transfer is not part of a larger transaction or series of transactions worth more than that. Split a £10,000 sale into ten transfers and the series rule brings it back into charge, so the threshold rewards small genuine transfers rather than paperwork.
The form, the deadline and the rounding
The stock transfer form has to reach HMRC and the duty has to be paid within 30 days of the form being signed and dated. HMRC rejects submissions for avoidable reasons, and the one that catches people is arithmetic: the duty must be rounded up to the nearest £5 on each document. Forms go to the stamp duty mailbox by email rather than by post, and HMRC aims to deal with 80% of them within 15 working days while asking submitters to allow 20.
What is outside the charge
You do not pay when shares are given to you for nothing, when you subscribe to a new issue, or when you buy units in a unit trust or shares in an open ended investment company from the fund manager. Foreign shares bought outside the UK are normally outside Stamp Duty and SDRT too. Selling is a different question entirely, because a disposal raises capital gains rather than transfer tax.
Questions people ask about stamp duty on shares
Is stamp duty on shares 0.5% of the company value?
No. It is charged on the consideration given for the shares being transferred, which is what the buyer actually pays, not on the value of the whole company and not on the nominal value of the shares. Where the consideration is something other than cash, its cash value has to be stated on the form.
Do I pay anything on a transfer of £1,000 or less?
On a stock transfer form, no, provided the transfer is not part of a larger transaction or a series of transactions worth more than £1,000. You complete certificate 1 on the back of the form and you do not normally need to send it to HMRC at all.
What happens if the form is late?
The duty is payable within 30 days of the form being signed and dated, and HMRC states that the amount you pay may include penalties and interest. Because the company cannot safely register the transfer until the form is stamped, a late form usually delays the shareholder register as well as costing money.
Is this the same tax as stamp duty on a house?
No. Land in England and Northern Ireland is Stamp Duty Land Tax, Scotland charges Land and Buildings Transaction Tax and Wales charges Land Transaction Tax. Shares are charged under the older Stamp Duty and its reserve tax counterpart, with their own rate, their own threshold and their own form.