Stamp Duty on Shares: Rates, Exemptions, and the 1.5% Charge

Stamp duty on shares is a 0.5% tax you pay when you buy existing shares in a UK-incorporated company. It comes in two forms: Stamp Duty on paper transfers using a stock transfer form, and Stamp Duty Reserve Tax (SDRT) on electronic transfers settled through CREST.¹ If you buy through a broker on an exchange, SDRT is deducted automatically at the point of purchase. If you buy on paper, you have 30 days from the date the transfer form is signed to pay HMRC and submit the document, and missing that deadline brings penalties and interest.²

When the Charge Applies

The tax applies to purchases of existing shares in a UK-incorporated company. Subscribing to newly issued shares does not trigger it.¹

How you buy determines which version you pay:

Paper transfers using a stock transfer form attract Stamp Duty, but only when the consideration exceeds £1,000.¹
Electronic transfers through CREST attract SDRT. For most retail investors buying through a broker, SDRT is collected automatically, with no separate form or payment to arrange.

The paper route matters most for private share sales, management buyouts, and transfers between individuals or private companies. If your broker executes the trade on an exchange, you will see the tax deducted alongside your purchase and there is nothing further to do.

How Much You Pay

The rate is 0.5% of the total consideration.¹ “Consideration” covers cash, the value of any debt you take on, and the value of any other shares or assets exchanged as part of the deal.³

For paper transfers, the final figure is rounded up to the nearest £5. A calculated liability of £12.10 becomes £15.¹

If you pay in a foreign currency, convert to sterling using the exchange rate on the date the transfer document is signed. Where the sale contract specifies a rate, that rate applies; otherwise, use the Bank of England rate for that date.⁴

Transfers to Connected Companies

When listed securities are transferred to a connected company, the tax is charged on the higher of the actual consideration or the market value of the shares on the date of transfer. If no consideration is paid, the full market value is used.⁵ The rule stops related entities from minimising the charge by selling shares at an artificially low price.

Earn-Outs and Contingent Prices

Where part of the price depends on future performance, Stamp Duty is charged on the stated minimum or maximum contingent amount rather than the eventual figure. This is the contingency principle, and it can produce a bill that does not match what the buyer ultimately pays.⁶

Exemptions That Can Wipe Out the Charge

Several transfers escape the charge entirely. Even where no duty is owed, you may still need to certify the exemption on the transfer form.

Paper transfers where the total consideration is £1,000 or less. You self-certify by completing the certificate of value on the back of the stock transfer form.¹
Genuine gifts, where nothing of value changes hands.⁷
Transfers between spouses or civil partners on marriage, formation of a civil partnership, divorce, or dissolution.⁷
Transfers to UK-registered charitable companies or trustees of a charitable trust. Following changes in the Spring Finance Bill 2023, only charities that fall under the jurisdiction of the UK courts qualify.⁸

When an exemption applies but the consideration exceeds £1,000, complete the second exemption certificate on the back of the stock transfer form rather than the standard certificate of value.⁷

Corporate groups can also claim relief on intra-group transfers, but the parent must beneficially own at least 75% of the subsidiary’s ordinary share capital and be entitled to at least 75% of its distributable profits and 75% of its assets on a winding up. Group relief cannot be self-certified: the transfer document must be submitted to HMRC for formal adjudication with a signed claim letter and evidence of the group structure.⁹

Paying and Filing a Paper Transfer

Paper transfers are documented on a stock transfer form, available from a broker, solicitor, or accountant.¹ The form requires:

Full names and addresses of both seller and buyer
A description of the shares, including quantity, class, and company name
The total consideration in pounds sterling, broken down by cash, other shares or securities exchanged, and any debt assumed³

Non-cash elements need a cash value. Where a market value rule applies because the parties are connected, HMRC recommends noting both the actual consideration and the market value figure used for the calculation on the form. Electronic signatures are accepted, and the signed form can be emailed as a scanned PDF rather than posted.³

You have 30 days from the date the form is signed to pay HMRC and submit the document. If the deadline falls on a weekend or bank holiday, payment must reach HMRC by the end of the previous working day.² This window is tighter than many buyers expect.

Payment is by bank transfer. HMRC does not accept cheques. CHAPS or Faster Payments arrive same-day or next-day; Bacs takes three working days. Once you have sent the payment, email a scanned PDF of the signed stock transfer form to stampdutymailbox@hmrc.gov.uk with the payment reference, amount, and date.²

HMRC returns an electronically stamped document as proof of payment. The company registrar needs this stamped document before it will update the share register to record you as the new owner.

What Happens If You Miss the Deadline

Missing the 30-day window triggers a penalty tied to how late the document is:

Up to 12 months late: 10% of the duty owed, capped at £300
12 to 24 months late: 20% of the duty owed
More than 24 months late: 30% of the duty owed¹⁰

HMRC does not charge a penalty below £20, and penalty amounts are rounded down to the nearest £5. Where the delay exceeds 12 months and HMRC has evidence the failure was deliberate, the rate can be pushed higher.¹⁰

Interest accrues daily on the unpaid duty from the deadline until the day payment is received. HMRC waives interest charges below £25 per document. You can appeal a penalty in writing within 30 days of the formal notice, but late-payment interest itself cannot be appealed; HMRC treats it as a commercial charge rather than a penalty.¹⁰

The 1.5% Higher Rate

A separate 1.5% charge can arise when UK shares are transferred into a depositary receipt scheme (such as an American Depositary Receipt programme) or a clearance service.¹ Since 1 January 2024, this higher rate no longer applies to new share issues, transfers connected to a company’s initial listing, or capital-raising transfers.¹¹ It still applies where an existing shareholder independently transfers shares into a depositary receipt issuer or clearance service outside those qualifying situations.¹²

HMRC treats transfers made within four months of a qualifying listing event as being “in the course of” that listing, so they remain exempt. After the four-month window closes, the 1.5% charge can apply again.¹²

A Note for US Investors

American investors buying UK shares, whether directly or through ADR conversions, will encounter the 0.5% charge. It almost certainly cannot be claimed as a US foreign tax credit. The credit is limited to foreign income taxes, and stamp duty is a transaction tax rather than a tax on income, profits, or gains.¹³ Publication 514 does not name stamp duty specifically, but makes clear that taxes based on a transaction amount rather than realised net income do not qualify.

The stamp duty you pay can be added to your cost basis in the shares as a cost of acquisition, which reduces your taxable gain when you eventually sell. Keeping a record of the exact amount paid on each purchase is worthwhile, since 0.5% adds up across a portfolio of UK holdings.

1
GOV.UK. Tax When You Buy Shares
2
GOV.UK. Pay Stamp Duty on Shares
3
GOV.UK. Completing a Stock Transfer Form
4
HM Revenue & Customs. Stamp Taxes on Shares Manual – STSM021050
5
HM Revenue & Customs. Stamp Taxes on Shares Manual – STSM021310
6
GOV.UK. Stamp Taxes on Shares – Rules on Consideration – Summary of Responses
7
GOV.UK. Stamp Duty Reliefs and Exemptions on Share Transfers
8
GOV.UK. Stamp Taxes on Shares Manual – STSM041150
9
HM Revenue & Customs. Relief From Stamp Duty in Respect of Instruments Effecting Intra-Group Transfers of Stock or Marketable Securities
10
GOV.UK. Stamp Duty – Penalties, Appeals and Interest
11
GOV.UK. Modernisation of the Stamp Taxes on Shares Framework – 1.5% Charge
12
HM Revenue & Customs. Stamp Taxes on Shares Manual – STSM053110
13
Internal Revenue Service. Publication 514 – Foreign Tax Credit for Individuals