Stamp duty

Stamp duty is a tax levied on the purchase of UK shares worth more than £1,000 using a stock transfer form. This is charged at 0.5% but is rounded up to the nearest £5 and paid directly to HMRC by the investor. If shares are bought electronically, as most are nowadays through a system called CREST, Stamp Duty Reserve Tax applies. This is still 0.5% but it is initially paid by the broker who then recovers the money from the investor. Buying units in unit trusts or shares in open ended investment companies does not attract Stamp Duty. Stamp Duty Land Tax applies to the purchase of property and land above a government set threshold which is currently £125,000. The rate varies depending on the value of the property, its intended use, whether it is freehold or leasehold and whether it is a first home for the buyers.

This definition is for general information purposes only