ACCA Strategic Professional · Advanced Taxation (UK) · Stamp taxes (stamp duty, stamp duty reserve tax and stamp duty land tax)
Zena Ltd acquires 60,000 shares in Orchid plc, a UK company, from an unconnected individual by a stock transfer form. The agreed price is £2.30 per share. The market value on the date is £2.50 per share. What stamp duty is payable?
The stamp duty is £690. Duty is charged at 0.5% on the consideration actually paid, which is £138,000 (60,000 x £2.30), not on market value. Using the £2.50 market value would wrongly give £750.
- A£690Correct
- B£750
- C£700
- D£1,500
Explanation
Stamp duty is charged on the actual consideration given for an arm's length purchase, not on market value. Consideration is 60,000 x £2.30 = £138,000. At 0.5% the duty is £690. Using the market value of £150,000 would give £750, which is the key error.
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