Most tax planning happens after the fact. Profits are counted, allowances applied, a return is filed. But one charge sits outside that cycle entirely: stamp duty on share purchases is settled at the moment of the trade, deducted automatically by the broker, and never appears on a self-assessment return at all.

That invisibility is the interesting part. A cost that never reaches a return is a cost nobody reviews at the year end — and for a client building a portfolio through regular purchases, it compounds quietly.

What is actually charged

Electronic share purchases attract Stamp Duty Reserve Tax at 0.5% of the consideration, taken by the broker at the point of settlement. Paper transfers using a stock transfer form fall under stamp duty proper, also 0.5%, but with a threshold: transfers where the consideration is £1,000 or less carry no charge.

Two points clients regularly get wrong. The charge falls on the purchase, not the sale — selling shares triggers capital gains considerations but no stamp duty. And it is levied on the transaction value, not on profit, so it applies identically whether the position eventually gains or loses.

The exemptions that matter in practice

The exemptions are broader than most people assume, and they are where advice actually changes outcomes:

  • AIM-listed shares carry no stamp duty or SDRT. For a client whose holdings skew toward smaller UK companies, this removes the charge on a substantial share of their activity.
  • Exchange-traded funds are likewise exempt — one reason fund-based exposure to UK equities can carry a lower total transaction cost than buying the constituents directly.
  • Newly listed companies. The Autumn Budget 2025 introduced a listing relief exempting shares in companies newly admitted to a UK regulated market from stamp duty and SDRT for three years from admission, intended to make London listings more attractive. Clients buying into a recent UK IPO should check whether it applies — it removes the 0.5% entirely.

The detail of what qualifies, and the interaction between the electronic and paper regimes, is set out in BrokerRank's guide to stamp duty on shares, which covers the current rates alongside the exemptions and the reforms now in progress.

What changes in 2027

The structure itself is being replaced. In July 2026 HMRC published draft legislation for a Securities Transfer Tax, intended to supersede both stamp duty and SDRT from 2027. The headline 0.5% rate on share purchases is expected to carry across, but the administration changes materially: a single, self-assessed, digitally administered tax in place of today's two parallel regimes.

For practices, the practical consequence is process rather than rate. Self-assessment means the compliance burden shifts — a charge currently handled invisibly by brokers and registrars becomes something with a return attached. The legislation is still moving through Parliament, so any 2027 planning should be treated as provisional, but the direction is settled enough to raise with clients who transact in size.

A small charge worth naming

Half a percent will not decide a portfolio's outcome. But it is the one investment tax that clients pay without ever seeing a bill, and the exemptions around it — AIM, ETFs, and now newly listed companies — are precisely the kind of detail that goes unused when nobody raises it. It costs one line in a year-end conversation.