Stamp Duty on Share Purchases: What Buyers Often Miss

When people think about stamp duty, they almost always think about property. Houses, flats, second homes. What’s far less well known is that stamp duty can also apply when you buy shares in a company.

This is one of the most common areas where we see things go wrong. Not because people are careless, but because stamp duty on shares often sits in a grey area where responsibility isn’t clear and assumptions get made.

If you’ve bought shares - whether personally or through a business - and never stopped to question the stamp duty position, there’s a real chance something has been missed.

Do you pay stamp duty when buying shares?

In most cases, yes.

If you buy shares in a UK company, stamp duty is usually charged at 0.5% of the amount paid. This applies whether you’re:

• Buying shares as an individual
• Buying shares through a company
• Purchasing a minority stake
• Acquiring full control of a business

Stamp duty is generally payable by the buyer and must be dealt with within a set timeframe. On paper, that sounds simple. In practice, it’s where many problems begin.

Why stamp duty on shares is so often overlooked

Unlike property transactions, share purchases don’t always follow a rigid process. They’re often:

• Done privately
• Agreed informally before paperwork is finalised
• Part of wider commercial arrangements
• Handled without a dedicated stamp duty specialist involved

In many cases, buyers assume:

• Their solicitor has dealt with it
• Their accountant has covered it
• Or that stamp duty doesn’t apply at all

Unfortunately, those assumptions are frequently wrong.

Common mistakes we see with share purchase stamp duty

Over the years, we’ve seen the same issues come up time and time again. Some of the most common include:

Assuming stamp duty doesn’t apply

Because shares aren’t property, many buyers assume there’s no stamp duty to worry about. This is probably the biggest misconception we see.

Paying the wrong amount

Where stamp duty is paid, it’s not always calculated correctly. This can happen where:

• The purchase price isn’t clear
• There are multiple transactions linked together
• There are multiple persons buying shares
• Deferred or conditional payments are involved

Missing deadlines

Stamp duty on shares has strict submission and payment deadlines. Missing these can lead to penalties and interest.

Poor or incomplete paperwork

Stamp duty relies heavily on documentation. If agreements don’t properly reflect what happened in practice, problems can arise later.

Internal or connected-party transfers

Transfers within families, business partners, or group companies are often treated casually. These are exactly the situations where stamp duty is most likely to be missed.

What happens if stamp duty on shares is missed?

Stamp duty doesn’t quietly go away if it isn’t dealt with.

If it’s picked up later, the buyer can be liable for:

• The unpaid stamp duty
• Interest
• Penalties, depending on how long it’s been outstanding

The issue is rarely discovered immediately. More often, it comes to light during:

• A business sale
• A company restructure
• A funding round
• Due diligence by new advisers

At that stage, what could have been a straightforward fix becomes a much bigger headache.

Why this often surfaces years later

Stamp duty on shares is one of those issues that can sit unnoticed for years.

Everything appears fine until:

• Someone new reviews the company
• A buyer asks detailed questions
• Documents are scrutinised more closely

By then, correcting the position may involve revisiting old agreements, tracing transactions, and dealing with penalties that could have been avoided.

Can stamp duty on shares be corrected after the event?

In many cases, yes - but timing matters.

If issues are identified early, they’re usually much easier to deal with. Where problems have been left for years, the process can be more complex and costly.

This is why proactive reviews are so valuable. It’s far better to identify potential issues on your terms rather than having them forced into the open at the worst possible moment.

When should you consider a stamp duty review?

A review is particularly sensible if:

• You’ve bought shares and never actively dealt with stamp duty
• The transaction was informal or privately agreed
• The purchase was part of a wider deal or restructure
• You’re planning to sell or restructure the business
• You’re bringing in new investors

Even if everything turns out to be correct, having certainty is often worth it.

Why specialist advice matters

Stamp duty on shares often falls between different advisers. Legal advisers may focus on the commercial agreement. Accountants may assume stamp duty has already been handled. As a result, no one fully owns the issue.

Specialist stamp duty advice focuses on:

• Whether stamp duty applied at all
• Whether it was calculated correctly
• Whether any reliefs were available
• Whether the documentation supports the tax position

At SCA Tax, this is exactly the type of work we specialise in. We look specifically at stamp duty — not as a side issue, but as the main focus.

Frequently asked questions

Do you always pay stamp duty when buying shares?

In most cases, yes. There are some exemptions, but these are specific and should always be checked.

Who is responsible for paying stamp duty on shares?

Usually the buyer, although the position should be confirmed as part of the transaction.

What if the shares were transferred years ago?

Historic transactions can still be reviewed. In fact, this is often essential before a sale or restructure.

Can stamp duty penalties be reduced?

In some cases, yes, particularly where issues are identified and addressed proactively.

Final thoughts

Stamp duty on share purchases is one of the most commonly missed taxes we see. Not because people don’t care, but because it’s easy to assume someone else has dealt with it.

If you’ve bought shares and aren’t completely confident the stamp duty position was handled correctly, it’s worth checking. A short review now can prevent a much bigger issue later.