Seeking advice from tax consultants or company secretarial experts can be essential when completing a share transfer to ensure that the correct amount of stamp duty is paid on the transfer. Even if professional advice is not sought, there are some key considerations when completing a transfer. These include:
Ensure that the stock transfer form is completed correctly
Completing the transfer form correctly is essential and a tax consultant can assist with this. Common issues include signing the stock transfer form in the wrong place and submitting the form to HMRC without filling in an effective date. Failure to complete the transfer form correctly can result in a delay when it is sent to HMRC to be stamped.
Know which transfers are exempt from stamp duty
Generally where the consideration of a transfer is less than £1,000, stamp duty is not payable and the stock transfer form should be certified accordingly. Other transfers that can be exempt from stamp duty include when shares are transferred under a reorganisation or acquisition. In such cases an application should be submitted to the stamp duty adjudication section to verify this. If you are unsure whether your transfer is exempt from stamp duty, you could benefit from contacting a tax consultant.
Ensure that the stamp duty payable is calculated correctly
The stamp duty that is currently payable on a share transfer is 0.5% of the consideration payable. This is only relevant for transfers where the total consideration is over £1,000. If a transfer is part of a larger transaction where the consideration is over £1,000 then stamp duty could be payable. Once the consideration has been calculated it should be rounded up to the nearest £5.
Ensure that the stamp duty is paid within the deadline
Stamp duty is payable within 30 days of the effective date of a transfer, which usually means within 30 days of the date that the form is signed. To pay stamp duty the stock transfer form and relevant amount of stamp duty should be sent to HMRC. If the form is not presented to HMRC for stamping within the deadline, HMRC could charge both a penalty and interest, depending on how late the transfer form was presented.
If you are unsure consult an expert such as a tax consultant
If you require any assistance with your share transfer and would like to talk to a tax consultant or business adviser, please contact us on 0208 952 0140 or at [email protected]