Stamp Duty and Stamp Duty Reserve Tax on share transfers

If you’re dealing with share transfers in the UK, the first question is whether the transfer is on paper or electronic. Paper transfers usually fall under Stamp Duty, while electronic or paperless transactions usually fall under Stamp Duty Reserve Tax (SDRT).

In standard cases, both taxes are charged at 0.5%, but the process is different: paper Stamp Duty is normally relevant where a Stock Transfer Form is used and the chargeable consideration exceeds £1,000, while SDRT is usually collected automatically on electronic trades settled through CREST.

Common exemptions include genuine gifts, inheritances, certain spouse or civil partner transfers, divorce or dissolution transfers, and shares traded on a recognised growth market that are not listed on any market.

This article reflects the law and published guidance current on 8 May 2026. The government is working towards a future Securities Transfer Tax (STT) and a new digital filing model, but the day-to-day rules that readers need to follow right now are still the existing Stamp Duty and SDRT rules.

What’s the difference between Stamp Duty and Stamp Duty Reserve Tax?

Stamp Duty and Stamp Duty Reserve Tax are closely related, but they are not the same thing. Stamp Duty applies to paper instruments that transfer shares, while SDRT applies to agreements to transfer chargeable securities and therefore captures most electronic share transfers.

In plain English, a private company transfer completed on a paper Stock Transfer Form usually points you towards Stamp Duty, while an online or electronic securities purchase settled through CREST usually points you towards SDRT.

That distinction matters because the deadlines, filing route, and rounding rules are different. Paper Stamp Duty is rounded up to the nearest £5 and usually has to be paid, with the transfer documents submitted, within 30 days of the form being signed and dated. SDRT is normally rounded to the nearest 1p, and off-market deadlines depend on whether the trade could have settled through CREST.

To avoid double taxation, HMRC makes clear that once a paper instrument is properly stamped with the appropriate Stamp Duty, the related SDRT liability is discharged.

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How to pay Stamp Duty and SDRT on share transfers

When buying shares using a Stock Transfer Form, the buyer normally has to pay Stamp Duty where the chargeable consideration is more than £1,000. The rate is 0.5% of the consideration, rounded up to the nearest £5, and the payment, plus the transfer documents, must reach HMRC no later than 30 days after the form has been signed and dated.

Stamp Duty for paper transfers

A simple example shows how the rounding rule works in practice. If shares are bought on paper for £1,050, the duty calculation is £5.25, but because Stamp Duty must be rounded up to the nearest £5, the amount payable becomes £10. If the consideration is £1,000 or less, and the transfer is not part of a larger transaction or series of transactions above that amount, certificate 1 on the back of the form can usually be completed instead of paying Stamp Duty.

The current process is more digital than many older articles suggest. Physical stamping was permanently withdrawn, e-signatures are accepted, and HMRC now sends a confirmation letter with verification codes once it has checked the form and matched the payment. HMRC says it aims to deal with 80% of stock transfer forms within 15 working days, and that confirmation is what allows the registrar to register the new owner of the shares.

SDRT for electronic transfers

Stamp Duty Reserve Tax is the tax most readers will encounter on electronic share transfers. When shares are bought electronically through CREST, SDRT is charged at 0.5%, rounded to the nearest 1p, and it’s normally deducted automatically, so the buyer does not need to send a separate notice or arrange a manual payment.

The position changes if the trade happens outside CREST. For off-market transfers, the responsible party must send HMRC a written notice with the buyer and seller details, the securities transferred, any exemption or relief claimed, the value given, and a payment reference. The deadline is 14 days after the trade date if the transfer could have been made through CREST but was not, or the seventh day of the month after the calendar month of the agreement if it could not have been made through CREST.

Exemptions and reliefs for Stamp Duty and SDRT

Some UK share tax exemptions (and reliefs and exemptions) are straightforward.

No Stamp Duty or SDRT is normally payable where shares are:

• Received as a genuine gift for no consideration
• Inherited under a will
• Transferred between trustees
• Returned after being held as security for a loan
• Transferred between spouses or civil partners on marriage or civil partnership
• Transferred on divorce or civil partnership dissolution

Shares admitted to trading on a recognised growth market but not listed on any market are also exempt. Shares traded on the Private Intermittent Securities and Capital Exchange System (PISCES) have also been exempt from both Stamp Duty and SDRT since 3 July 2025.

The filing treatment depends on why no tax is due. If there’s no consideration at all, you will not usually have to pay Stamp Duty or send the Stock Transfer Form to HMRC. If the transfer is exempt and there’s chargeable consideration of more than £1,000, certificate 2 on the back of the form is usually completed, and the document goes straight to the company registrar. For exempt off-market SDRT transfers, HMRC does not usually need a notice, but the documents should be kept for up to 6 years in case evidence is requested later.

Special cases for reliefs

Reliefs are different from exemptions. An exemption means the transaction is outside the charge. A relief usually means the transaction would otherwise be taxable, but the legislation can reduce the tax to nil if the conditions are met.

Common examples include intra-group relief, acquisition relief, and reconstruction relief. Intra-group relief can apply to transfers between associated companies, broadly where one company owns at least 75% of another’s issued ordinary share capital or both are 75% subsidiaries of a third company, provided the specific anti-avoidance and outsider-consideration rules are satisfied. Acquisition relief and reconstruction relief are narrower and more condition-heavy, including bona fide commercial purpose tests.

There are also reliefs for some recognised intermediaries, stock lending and repurchase transactions, and qualifying charity transfers.

This is also the point where specialist share transfer advice in the UK becomes much more valuable. SDRT does not have a standalone intra-group relief, although HMRC says a successful Stamp Duty group relief claim can cancel an SDRT charge in some cases. HMRC also has market value rules for certain connected-company transactions, which means the tax can be calculated on market value rather than the actual price paid.

On top of that, the Finance Act 2026 introduced UK listing relief for SDRT, disapplying the 0.5% charge on transfers of securities in newly listed companies for 3 years from listing, but that relief does not extend to the separate 1.5% charge on certain transfers into depositary receipt systems or unelected clearance services, and it does not apply to takeover or merger transfers involving a change of control.

Practical guidance on completing share transfers

Start with the paperwork, not the tax. HMRC says a Stock Transfer Form should identify the quantity, class and type of shares being transferred, the buyer’s name and address, the seller’s name and address, and the value in pounds sterling of the consideration. Consideration is wider than cash: it can include other shares, debt assumed or released, or an amount calculated under a share purchase agreement. If the amount is calculated by reference to another document, that document should be included. If there’s no consideration, “Nil” should be entered. HMRC also notes that it does not issue Stock Transfer Forms, so they normally need to be obtained from a broker, company registrar, lawyer, accountant, or another reputable source.

Certificates

The next step is deciding whether certificate 1, certificate 2, or a separate relief claim is needed. Certificate 1 is for consideration of £1,000 or less, where the transfer is not part of a larger series over that amount. Certificate 2 is for exempt transfers or transfers where the consideration is not chargeable consideration. If there’s no consideration at all, no certificate is usually needed. If you’re claiming relief instead, the form and supporting documents still need to go to HMRC so the relief can be considered.

Leave enough time

Allow enough time to get the process right. HMRC says the most common causes of delay are forms that are unsigned or undated, duty that has not been rounded correctly on each document, missing values for non-cash consideration, missing share purchase agreements where the figure depends on them, and missing schedules where several forms are submitted together.

Confirmation

Once HMRC has confirmed receipt of the Stamp Duty or relief claim, that confirmation should be sent with the Stock Transfer Form and share certificate to the registrar so the new ownership can be registered and a new share certificate can be issued. After that, make sure your internal company records and later filings with Companies House remain consistent, because shareholder information is checked through the confirmation statement, and some share changes have separate reporting rules.

Transfer of Shares Service from Rapid Formations

At Rapid Formations, we offer a range of professional services to our clients, including a Transfer of Shares Service. If you wish to transfer shares from one shareholder to another, we can prepare and issue all of the documentation required to complete the transfer, including:

• Stock Transfer Form transferring legal ownership of the share(s)
• Minutes of Meeting to approve the share transaction
• Share Certificate(s) for the new shareholder

The service can be ordered online and completed on the same day, provided all necessary information is supplied. We can also prepare and file your confirmation statements, ensuring that shareholder information remains up to date on the public register at Companies House.