STAMP DUTY

When individuals purchase shares In the UK it is liable for stamp duty reserve tax (SDRT). If purchased electronically, shares that are transferred using stock transfer forms pay stamp duty. Tax is paid on the price you pay for the shares, even if their market value is much higher.

UK tax has to be paid when you buy:

• Existing shares in a company incorporated in the UK
• Take an option to buy shares
• An interest in shares, i.e. 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, i.e. rights you have when new shares are issued

UK tax is not due if:

• 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 a fund manager
• Buy units in a unit trust from a fund manager

Stamp duty or SDRT is not usually payable if you buy shares outside the UK, but other taxes may be due dependant on what country the shares or company is registered in.

When shares are sold, UK residents may need to pay Capital Gains Tax (CGT) which is calculated as the difference between what you paid for them and what you sold them for on the basis that a profit (gain) was made.

Shares and Investments liable for tax in the UK are:

• Shares that aren’t in an ISA or PEP
• Units in a unit trust
• Certain bonds (not including Premium Bonds or qualifying Corporate Bonds)

Tax in the UK is not due when:

• Shares are put into an ISA or PEP
• Shares in employer Share Incentive Plans (SIPs)
• UK Government gilts (including premium bonds)
• Qualifying corporate bonds
• Employee shareholder shares