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ACCA Strategic Professional · Advanced Taxation (UK) · Taxes applicable to a given situation or course of action and their impact

Kiran gifts 20,000 shares in an unquoted UK company to her daughter. The shares are worth £80,000 and no consideration is given. Which statement about stamp duty on the transfer is correct?

No stamp duty is payable. Stamp duty on shares is charged at 0.5% of the consideration given, and a gift involves no consideration. Market value is irrelevant for this charge, although the gift may still have capital gains tax or inheritance tax consequences.

  1. AStamp duty of £400 is due because the shares have a market value of £80,000
  2. BStamp duty is calculated on the gain Kiran makes, not on value
  3. CStamp duty is nil because the charge is based on consideration given, and there is none for a giftCorrect
  4. DStamp duty of £400 is due from Kiran as donor

Explanation

Stamp duty at 0.5% is charged on the consideration given for the shares, not on market value. A pure gift has no consideration, so there is no stamp duty. The £400 options wrongly use market value; the gain option confuses stamp duty with CGT.

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