Stamp duty

By Tolley
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The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Stamp duty
  • The importance of stamping
  • The stamping procedure
  • Full details
  • Amount of the duty
  • Exemptions
  • Consideration
  • Exchanges
  • Groups
  • Adjudication
  • Interest
  • Penalties

Stamp duty is a duty on documents (instruments) relating to stock (eg shares) or marketable securities. Where there is a written instrument by which shares are transferred, there will normally be the requirement to pay stamp duty. Failing to have an instrument correctly stamped is an offence and can lead to large fines.

The importance of stamping

Instruments are subject to stamp duty if they relate to UK shares or securities, or if the instruments are executed in the UK.

If an instrument that is liable to be stamped is not so stamped, it cannot be used as evidence in civil proceedings. Therefore, a failure to have a document properly stamped could lead to legal problems in the case of a dispute over ownership. A company secretary will not register a transfer of shares or securities if the document has not been properly stamped.

Although stamp duty is not directly enforceable, interest and penalties can be levied for a failure to ensure that documents are properly stamped. The interest and penalty rules are covered below.

The stamping procedure

Instruments that require stamping are normally either sent or taken to the London Stamp Office. The stamping officer will physically stamp the instrument, usually with a number of red stamps, once the document has been appraised and the duty paid.

The administration and collection of stamp duty is the responsibility of HMRC (Stamp Taxes).

Full details

Full details of the facts and circumstances relating to an instrument must be provided in order to allow the correct stamp duty to be calculated. Failure to do so can lead to substantial fines.

SA 1891, s 5(a) (subscription sensitive)
Amount of the duty
Ad Valorem duty

An instrument transferring shares on a sale carries ad

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