When you buy UK shares, you pay a tax or duty on the transaction.

This is called Stamp Duty Reserve Tax for ‘paperless transactions’. It’s deducted from what you pay for the shares - this might be different from their current market value.

You pay a duty called Stamp Duty for transactions using a stock transfer form.

Taxable transactions

You pay tax when you buy:

• existing shares in a company incorporated in the UK
• an option to buy shares
• rights arising from shares, eg the rights under a rights issue
• an interest in shares, eg an interest in the money from selling them
• shares in a foreign company that maintains a share register in the UK

Non-taxable transactions

You don’t have to pay tax if you:

• are given shares for free
• buy a new issue of shares in a company
• buy units in a unit trust
• invest in an ‘open ended investment company’ (the trust or company pays the tax, so you don’t have to)
• buy employee shareholder shares up to £50,000

It's not just paying for shares in cash that's taxable. You pay tax on the value of what you gave in exchange for the shares.

Paperless transactions

Tax is automatically charged if you buy shares electronically (through the ‘CREST system’). This tax is known as Stamp Duty Reserve Tax.

Tax will be automatically charged at 0.5% when you buy shares through a stockbroker, as it's a paperless transaction.

Paper transactions

You’ll have to pay Stamp Duty if you use a stock transfer form to buy shares and the transaction is over £1,000. A stock transfer form is classified as a paper transaction.

You pay 0.5% duty, which will be rounded up to the nearest £5.

‘Depositary receipt schemes’ or ‘clearance services’

You’ll have to pay tax at 1.5% if you transfer shares into some ‘depositary receipt schemes’ or ‘clearance services’. This is when the shares are held by a third party and can be traded free of Stamp Duty or SDRT. Not all schemes work like this though - with some of them you pay tax in the normal way.

Help and advice

Contact the Stamp Taxes helpline for help and advice with Stamp Duty Reserve Tax and Stamp Duty.

Stamp Taxes helpline
Telephone: 0300 200 3510
Monday to Friday 8:30am to 5pm
Find out about call charges

You might have to pay Capital Gains Tax on profit from selling shares.

There are rules for working out the tax you have to pay on gains from shares. These rules are different for personally held shares and shares held as a business.

When you don’t have to pay Capital Gains Tax

You don’t have to pay Capital Gains Tax if you give away shares to your husband, wife or civil partner, so long as the following both apply:

• you’re not giving away shares you plan to resell
• you’ve lived together for part of the tax year in which give away the shares

You can claim Capital Gains Tax relief if you give away your shares to a charity.

You may still be able to apply for tax relief if you don’t fit into these categories. Read ‘Helpsheet 295’ to find out about this.

Download 'Helpsheet 295 - Relief for gifts and similar transactions' (PDF, 128KB)

If the shares have lost some or all of their value during the time you’ve owned them, you might be able to make what’s known as a ‘Negligible Value Claim’. See ‘Helpsheet 286 - Negligible Value Claims’ to find out more.

Download 'Helpsheet 286 - Negligible Value Claims' (PDF, 80KB)

You may have to pay a penalty if you have to pay Capital Gains Tax and don't tell HM Revenue & Customs (HMRC) by 5 October after the end of the tax year.

Shares received through your job

There are different rules on Capital Gains Tax if you get shares through your job. Read ‘Helpsheet 287’ to find out more about this.

Download 'Helpsheet 287 - HMRC Employee share and security schemes and Capital Gains Tax' (PDF, 80KB)

You don’t pay Capital Gains Tax as an employee shareholder if the shares were valued up to £50,000 when you received them.

Investments in small companies

You may be able to apply for relief through the Enterprise Investment Scheme or Seed Enterprise Investment Scheme if you’ve invested in small unlisted companies.

Share in your own business

You may also be able to claim Entrepreneurs’ Relief if you own at least 5% of the shares in a business for a year and you’re a director, partner or employee of the business.

You might be able to make a Negligible Value Claim - see helpsheet 286.

Download 'Helpsheet 286 - Negligible Value Claims' (PDF, 80KB)