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ACCA Strategic Professional · Advanced Taxation (UK) · Stamp taxes (stamp duty, stamp duty reserve tax and stamp duty land tax)

Blue Ltd issues 100,000 new shares to Mr Khan for £3.00 per share, then the same day he sells 40,000 of them to Ms Ito for £3.50 per share by stock transfer form. Considering only stamp duty under the 0.5% rate, what is the stamp duty due on the sale to Ms Ito?

The duty is £700. The charge arises on the sale to Ms Ito, based on the £140,000 consideration (40,000 x £3.50) at 0.5%. The original issue and its £3.00 price are not the basis for this transfer.

  1. A£700Correct
  2. B£1,500
  3. C£600
  4. D£800

Explanation

Only the transfer to Ms Ito is a stamp duty transaction on the facts. Consideration is 40,000 x £3.50 = £140,000, and 0.5% gives £700. £1,500 applies the rate to the original issue of £300,000, which is not a transfer. £600 uses the subscription price of £3.00 on the 40,000 shares, giving £120,000.

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