Stamp Duty | Glossary | Set Up a Company

Stamp Duty

Stamp Duty is a form of tax charged on instruments, i.e. written documents, and traditionally requires a physical stamp to be attached to or impressed upon the instrument in question. The more modern versions of the tax no longer require a physical stamp.

Stamp Duty is not payable on the Allotment of Shares. Stamp Duty is payable at the rate of 0.5% on the executed transfer of Shares of a Company. From 12 March 2008, Stamp Duty is not chargeable where the amount or value of the consideration is less than £1,000.

When a person purchases Shares either Stamp Duty Reserve Tax or Stamp Duty, depending on what type of transaction it is, is payable. Most Share Transfers nowadays are electronic, paperless transactions that are made through a Stockbroker. Stamp Duty Reserve Tax is payable on paperless transactions and it is automatically deducted when the transaction is made. When a person purchases Shares using a Stock Transfer form it counts as a paper transaction. Stamp Duty is payable on paper transactions, rather than Stamp Duty Reserve Tax.

Stock Transfer forms have to be sent to the Stamp Office of the HMRC for stamping within 30 days of the 'effective date' of the transfer together with payment of the Stamp Duty. This is normally the date the form is signed.

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