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

Priya buys 10,000 shares in Harlow Ltd, an unquoted UK company, from Tom for £5.00 per share, paid in cash. The transfer is made by a stock transfer form and no exemption applies. Using the 0.5% rate for stamp duty on shares, what is the stamp duty payable and who normally pays it?

Stamp duty is £250, being 0.5% of the £50,000 consideration (10,000 shares at £5). The buyer, Priya, normally pays stamp duty on a share transfer, not the seller. The other figures come from using the wrong rate or the wrong payer.

  1. A£250, paid by Priya (the buyer)Correct
  2. B£250, paid by Tom (the seller)
  3. C£500, paid by Priya (the buyer)
  4. D£25,000, paid by Priya (the buyer)

Explanation

Consideration is 10,000 × £5 = £50,000. Stamp duty is 0.5% × £50,000 = £250. The buyer normally bears the charge. Tom is not the normal payer, so the second option fails. £500 would come from applying 1% in error.

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