Stamp duty ― basic rules

By Tolley in association with Grant Thornton's stamp taxes team
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The following Corporation Tax guidance note by Tolley in association with Grant Thornton's stamp taxes team provides comprehensive and up to date tax information covering:

  • Stamp duty ― basic rules
  • Introduction and scope
  • Basis of charge and consideration
  • Common exemptions
  • Administration
  • Territorial extent

Introduction and scope

Stamp Duty is a tax on documents and has existed for over 300 years. During the latter part of the 20th century, and in particular following the introduction of Stamp Duty Land Tax (SDLT), the scope of Stamp Duty has been narrowed significantly.

The documents which are now within the scope of Stamp Duty are broadly confined to:

  • instruments relating to stock or marketable securities (FA 2003, s 125)
  • instruments transferring an interest in a partnership the assets of which include stock or marketable securities (FA 2003, Sch 15, paras 31–33)
  • instruments which transfer UK land and buildings where the contract was entered into before SDLT was introduced and which are not within the SDLT regime (FA 2003, Sch 19)

In practice, by far the most common circumstance where stamp duty is encountered is on stock transfer forms for the purchase of unquoted shares in UK registered companies.

The stamp duty statute is spread over many years, the most important legislation being the Stamp Act 1891 and FA 1999, Sch 13.

HMRC manual references are to the Stamp Taxes on Shares Manual (STSM), which has been recently updated.

Basis of charge and consideration

In most cases Stamp Duty is calculated at 0.5% of the amount or value of the consideration for the transfer rounded up to the nearest £5.

Where the consideration for the transfer (including other linked transactions) does not exceed £1,000 and an appropriate certificate is included in the document to which the transaction relates, then no Stamp Duty will be due and no stamping of the document is required. See STSM011060 for details regarding exemption certificates.

Only certain elements of consideration are taken into account for

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