Tax When you Buy Shares

When you buy shares, you usually pay a tax or duty of 0.5% on the transaction.

If you buy: 
  • shares electronically, you will pay Stamp Duty Reserve Tax (SDRT) 
  • shares using a stock transfer form, you will pay Stamp Duty if the transaction is over £1,000 
You will have to pay tax at 1.5% if you transfer shares into some ‘depositary receipt schemes’ or ‘clearance services’. 
 
You pay tax on the price you pay for the shares, even if their actual market value is much higher. 

Transactions you Pay Tax On  

You pay tax when you buy: 
  • existing shares in a company incorporated in the UK 
  • an option to buy shares 
  • an interest in shares, for example an interest in the money from selling them 
  • shares in a foreign company that has a share register in the UK 
  • rights arising from shares, for example rights you have when new shares are issued 

When you do not Pay Tax 

You do not have to pay tax if you: 
  • are given shares for nothing 
  • subscribe to a new issue of shares in a company 
  • buy shares in an ‘open ended investment company’ (OEIC) from the fund manager 
  • buy units in a unit trust from the fund manager 
You do not normally have to pay Stamp Duty or SDRT if you buy foreign shares outside the UK. But you may have to pay other taxes

When you Sell the Shares 

You may need to pay Capital Gains Tax when you sell your shares. 

Help and Advice 

Contact the Stamp Taxes helpline for help with SDRT and Stamp Duty. 
You can also get professional help (eg a tax adviser) with your tax. 

See Also: 

Further information on Tax when you buy shares can be found on GOV.UK's website.