Stamp Duty
A UK tax payable on the transfer of shares (0.5%) and property, typically borne by the buyer.
Full Definition
Stamp duty is a UK tax payable on the transfer of certain assets, including shares in UK companies and UK property. It is an important cost consideration in M&A transactions.
Stamp duty on shares:
- Rate: 0.5% of consideration
- Paid by: Purchaser
- Due: Within 30 days of execution
- Applies to: UK incorporated company shares
- Rounded up to nearest £5
Stamp Duty Land Tax (SDLT): Applies to UK property transfers in asset deals:
- Residential: 0-12% sliding scale
- Commercial: 0-5% sliding scale
- Additional rates may apply
Planning considerations:
- Share purchase vs asset purchase impact
- Apportionment of consideration
- Connected party rules
- Relief for group transactions
- Pension fund exemptions
Administration:
- Online stamping available
- Stock Transfer Form must be stamped
- Unstamped transfers cannot be registered
- Interest and penalties for late payment
Impact on deal structure: The stamp duty differential between share and asset purchases can influence transaction structure, though tax is rarely the primary driver of structure decisions.
Related Terms
Share Purchase Agreement (SPA)
The definitive legal contract governing the sale and purchase of shares in a company.
Asset Purchase
A transaction where the buyer acquires specific assets and liabilities of a business rather than its shares.
Completion
The legal transfer of ownership when all conditions are satisfied and the transaction formally closes.
Purchase Price
The total consideration paid by the buyer to acquire the target business or its shares.