UK Stamp Duty on Shares

If you’ve started investing in shares or are thinking about it, there’s a charge you might not have factored in: UK Stamp Duty on shares. It's not the kind of cost that jumps out at you, but it can nibble away at your returns, especially if you're investing larger amounts or trading frequently.

If you’re new to investing, stamp duty often slips under the radar. Brokers don’t highlight it like account fees or platform charges. It’s tucked away, automated, easy to miss, until you check your transaction costs or realise your returns aren’t quite what you expected.

For first-time investors trying to grow wealth steadily, every pound counts. That’s why it’s worth understanding this from the start, not after you’ve already spent thousands on UK stocks without factoring it in.

This guide is here to simplify the topic of paying UK Stamp Duty when buying shares and offer you what you need to make smarter investment decisions.

What is Stamp Duty on shares in the UK?

In the UK, when you buy certain types of shares, you may have to pay a tax called Stamp Duty Reserve Tax (SDRT). It's not to be confused with the stamp duty you pay on property, this one applies to the purchase of shares and some other securities.

Here’s how it typically works:

• If you buy shares electronically (which most people do), you pay Stamp Duty Reserve Tax (SDRT).
• If you buy paper share certificates (less common these days), you may pay Stamp Duty instead.

Most investors will encounter SDRT, so that’s what we’ll focus on.

How much is Stamp Duty on shares?

The rate is 0.5% of the purchase price of the shares. So, if you buy £10,000 worth of eligible UK shares, you’ll pay £50 in SDRT.

Let’s be clear: you don’t pay SDRT on every trade, only on purchases of UK-registered shares. Also, you only pay it once, at the time of purchase, not annually.

If you're using one of the best stock brokers in the UK, the fee's taken automatically when you trade, so you won't need to pay HMRC yourself—though it's easy to miss that it's happening.

How do you pay Stamp Duty on shares?

If you buy paper share certificates, you must complete the Stock Transfer Form in order to show who is transferring the shares to whom and you will usually receive this form from the seller or their agent.

You must then send the form to HMRC for stamping. The payment is then made via bank transfer to HMRC, which allows them to stamp the form and return it to you.

Note, you will need the stamped form to register the shares in your name.

When do you pay Stamp Duty on shares?

You’ll pay SDRT if:

• You buy shares in a UK company worth more than £1.
• The trade is done through an electronic system like CREST (used by most online brokers).
• You're buying listed shares on the London Stock Exchange (LSE) or similar UK exchanges during official London Stock Exchange hours.

You won’t pay SDRT if:

• You’re buying shares listed on foreign stock exchanges (like US companies).
• You buy ETFs, AIM shares, or unit trusts.
• You’re transferring shares between spouses (in certain cases).
• You’re using a SIPP or an ISA; in these cases, stamp duty may still apply, but tax wrappers offer other benefits that help balance it out.

If you’re buying UK-listed shares, chances are you will be paying Stamp Duty on shares and it adds up over time.

Can you avoid UK Stamp Duty on shares?

Sometimes, yes, but not always. It depends on what you’re buying and where.

Here’s how to legally avoid Stamp Duty:

• Invest in ETFs (Exchange-Traded Funds): Most are not subject to SDRT.

👉 Read here for more on the best ETF platforms

• Buy foreign shares: US, European, and other non-UK shares aren’t charged UK stamp duty.
• Use SIPPS or ISAs: While stamp duty may still apply to UK shares, these wrappers help shield your investment gains and dividends from other taxes.
• Invest in AIM-listed shares: These often don’t attract SDRT, but be cautious; they’re higher risk.

Be careful with “avoiding” strategies because just chasing investments to dodge fees can backfire if you're not clear on the risk/reward trade-offs.

How to keep UK Stamp Duty on shares to a minimum in your investment strategy

Rather than being caught off guard by SDRT, the key is to plan around it. That might mean:

• Choosing longer-term investments: If you’re holding a stock for several years, that 0.5% becomes less painful over time.
• Avoiding frequent trading: Every time you buy new eligible UK shares, you’re charged SDRT. The more you trade, the more fees pile up.
• Using stamp-duty-free alternatives: ETFs, foreign stocks, or diversified funds can offer similar exposure with fewer charges.

👉 Find out more here about what is an ETF

• Being more selective: Ask yourself, “Is this stock good enough to justify the extra 0.5%?” That’s a surprisingly useful filter.

This tax doesn’t mean UK shares are off-limits, but it’s one more reason to be intentional about your investment choices.

Deadlines and Penalties

There are implemented deadlines and penalties with Stamp Duty.

You must pay Stamp Duty and submit the stock transfer form to HMRC within 30 days of the date the transfer was signed. HMRC must receive:

• The signed stock transfer form
• The payment

Equally, if you miss the 30 day deadline, you may face a fixed penalty depending on how late the payment is made.

• Documents late by up to 12 months: 10% of the duty, capped at £300.
• Documents late by 12 to 24 months: 20% of the duty
• Documents late by more than 24 months: 30% of the duty

Note, these are in addition to the tax that you owe.

Interest Charges

Interest accrues daily on unpaid tax, and HMRC charges interest from the due date until payment is received. The interest rate depends on:

• How late the payment is
• How much duty you owe

Bottom line

Stamp duty on shares may seem like a minor detail, but when you’re building a portfolio, it’s the small things that add up. Especially if you’re investing regularly, those fees can quietly take a bite out of your returns.

You don’t have to avoid UK shares entirely. You just need to go in with your eyes open, weigh the pros and cons, and make sure every investment is worth the cost—Stamp Duty and all.

FAQs

Do I pay stamp duty on all shares?

No, only UK-registered shares bought for more than £1 are subject to SDRT. Foreign shares, ETFs, and AIM-listed shares usually aren’t.

Do I pay Stamp Duty on shares in ISA or SIPP?

Yes, SDRT still applies to UK shares held in ISAs or SIPPs. However, these wrappers protect you from capital gains and dividend tax, which often outweighs the 0.5% SDRT cost.

Can I claim stamp duty back if I sell at a loss?

No. Stamp duty is non-refundable, regardless of how your investment performs.

How is SDRT paid?

Your broker will automatically deduct it during the transaction, so you don’t need to file or pay anything yourself.

Should I avoid UK shares because of Stamp Duty?

No, just factor it into your overall investment costs, especially if you’re comparing different types of investments. Sometimes it’s still worth paying if the opportunity is strong enough.