Did you know you have to pay Stamp Duty on shares? When you buy shares and the price you pay is greater than £1,000, and the purchase is recorded on a stock transfer form, you’ll need to get the form stamped by HM Revenue and Customs (HMRC) and you must pay Stamp Duty (SD).
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 SD and don’t have to tell HMRC about the transaction, but you need to:
- 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 paid anything for the shares or not
The address of the registrar is on the share certificate. The registrar will issue you with your own share certificate.
Share transfers for more than £1,000
If you buy stocks and shares for more than £1,000 you will normally have to pay SD and you’ll have to send HMRC the stock transfer form for stamping, along with your payment.
Calculating how much SD to pay
The amount of SD you pay is based on the ‘chargeable consideration’ you give for the stocks or shares. The chargeable consideration can be:
- other stocks and shares
You won’t have to pay SD where the consideration you give is not chargeable. You pay SD 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.
Completing 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 quantity, class and type, for example 100 Ordinary shares, ABC Limited)
- the consideration
- the buyer
- the seller
If the transfer is exempt from SD, 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.
If you’re unsure about anything, don’t hesitate to contact us.