If you want to transfer shares between one person or company and another you will need a Stock transfer form. You may have to pay stamp duty when you acquire the shares but there are several exemptions which could mean you don’t have to pay any. Read on to find out more about stock transfer forms and how you can avoid paying stamp duty.
Do you need a stock transfer form?
How much Stamp Duty is payable on share transfers ?
Stamp duty is a statutory tax payable on the transfer of shares by stock transfer form. As of April 2020, stamp duty is chargeable on transactions over £1,000, at a rate of 0.5% of the sale price.
How can I avoid paying stamp duty on share transfers?
If you use a stock transfer form to buy stocks and shares for £1,000 or less, you don’t usually need to pay stamp duty.
Other situations where stamp duty is not chargeable are:
- receiving the shares as a gift
- receiving the shares from their spouse or civil partner
- a trustee receiving the shares held in a trust from another trustee
- receiving the shares from a liquidator who is winding up a business
- being transferred the shares as security for a loan
- receiving the shares back after they’d been held as security for a loan
- a beneficiary of a trust and the trust is being wound up
- the shares have been left to the recipient in a Will
- the shares are being transferred to the recipient as a result of a divorce or the dissolution of a civil partnership
- certain types of stock, eg loan notes or bonds are being transferred
If any of these apply, then there is generally no stamp duty is due on the transaction.
What happens if Stamp Duty is payable?
The stock transfer form must be sent to HRMC to be stamped. Due to COVID-19, you can email your stock transfer form to email@example.com.
- Stamp Duty must be paid before HRMC can process the stock transfer form.
- Once HMRC have checked the stock transfer form and confirmed they have received payment, they will send an email including a letter that will (i) confirm receipt of stamp duty (ii) detail the transactions they are confirming receipt for and the reference codes and (iii) give assurance that HMRC will not pursue a penalty against the registrar of the undertaking company for registering the new owner of the shares.
- This letter must be forwarded to the registrar of the undertaking company, together with the Stock Transfer Form and the share certificate.
- The registrar will then issue the recipient with their own share certificate.
What can Rocket Lawyer do to help?
- Make your free Stock transfer form
- Get quick answers to your legal questions
- Read legal guides on stock transfer forms