Stamp Duty on Shares: The 0.5% UK Buyers Pay in 2026

Buy £5,000 of a FTSE 100 share through your platform and £25 quietly disappears before the shares even settle. That is stamp duty on shares — a 0.5% tax the buyer pays on most UK share purchases, collected automatically so you rarely notice it on the contract note.

Here is what makes it worth understanding: the same £5,000 spent on a US share or an exchange-traded fund is taxed at exactly nothing. This guide shows what you actually pay, which purchases escape the charge entirely, and how the rules are changing in 2026 and 2027 — the practical version, for anyone building a UK share portfolio. If you are still choosing how to trade, a structured beginner share-dealing course puts these mechanics in context.

What is stamp duty on shares?

Stamp duty on shares is a 0.5% tax on buying existing UK shares, paid by the buyer and, for electronic trades, taken automatically by your broker at the point of purchase. On the same £10,000 purchase you pay £50. It is a transaction tax on the act of buying — not a tax on your profits or your dividends.

That distinction matters, because UK shares can be taxed at three separate moments. You pay stamp duty when you buy, you may owe capital gains tax when you sell, and you may owe tax on the income along the way. Each is a different rule with different thresholds — our guides to capital gains tax on shares and dividend tax on shares cover the other two.

Technically there are two taxes wearing one label. Stamp Duty Reserve Tax (SDRT) covers paperless electronic trades — almost everything a retail investor does through an online platform, settled through the CREST system. The older Stamp Duty covers physical paper transfers. Both charge 0.5%, but they behave differently, and the difference can cost or save you money.

You will almost never handle the payment yourself on an electronic trade. Your broker calculates the SDRT, adds it to the cost of the deal, and passes it to HMRC as part of settlement. That is why it hides in plain sight: it shows up as a small line on the contract note rather than a separate bill, and unlike the paper version it is not rounded to the nearest £5 — you pay the exact 0.5%.

Electronic SDRT vs paper stamp duty: the £1,000 trap

The single most misunderstood point is the £1,000 threshold. It exists — but only for paper transfers. Buy shares electronically and there is no minimum at all: a £200 online purchase still carries 0.5% SDRT.

Paper stamp duty works on a physical stock-transfer form (the J30), used mostly for private-company shares and off-market transfers. There, 0.5% is rounded up to the nearest £5, and nothing is due if the consideration is £1,000 or less. So a £1,500 paper transfer produces 0.5% = £7.50, rounded up to £10 payable.

The paper route also runs on your calendar, not the broker's. When duty is due, you send the completed stock-transfer form and payment to HMRC to be stamped, generally within 30 days of the transfer. Miss that window and interest and penalties can follow. For everyday online investing this rarely applies — but if you are transferring shares in a family company or an unlisted business, the £1,000 line and the deadline are the two numbers to remember.

Source: GOV.UK Stamp Duty Reserve Tax guidance; rapidformations.co.uk, 2026; Clearstream SDRT overview, 2026.

That third figure is an edge case. A 1.5% charge can apply when shares are transferred into a depositary receipt issuer or a clearance service — relevant to some cross-border structures, but not something a typical UK investor buying ordinary shares will trigger.

Do you pay stamp duty on US shares, ETFs and AIM stocks?

No — and this is where the tax quietly rewards how you invest. Stamp duty only bites on UK-incorporated shares. Buy a US-listed share, most exchange-traded funds, or a stock quoted on AIM, and no UK stamp duty applies at all. The instrument you choose, not the amount you spend, decides whether you pay.

Source: SmartInvestor UK, 2026; Interactive Investor, 2026; GOV.UK SDRT UK Listing Relief, 2025.

A caveat on funds: an ETF that itself holds UK shares pays stamp duty inside the fund when it trades those holdings, and that tiny cost is reflected in the fund price. But it is never charged to you at purchase. Because most US shares avoid the tax, investors buying them from the UK still weigh currency and withholding — covered in our guide to buying US stocks from the UK.

One trap catches even experienced investors: the investment trust. Trusts feel like funds — they pool money and spread it across holdings — but structurally they are UK-incorporated companies whose shares trade on the London Stock Exchange. So buying a UK investment trust does attract the 0.5% SDRT, while buying an open-ended tracker or a UCITS ETF with near-identical exposure does not. If you are cost-sensitive, that structural detail is worth a second look before you place the order.

What you'll actually pay: a worked example

Numbers make the point faster than rules. Take a £5,000 purchase and run it through four routes:

• £5,000 of a FTSE 100 share, electronically: 0.5% = £25 SDRT, added automatically at purchase.
• £5,000 of a US-listed share: £0 UK stamp duty.
• £5,000 into a UCITS ETF (e.g. an S&P 500 tracker): £0 to you.
• £1,500 of unlisted shares on a paper form: £7.50, rounded up to £10.

On a single £5,000 trade, £25 is easy to shrug off. Repeat it across a £100,000 portfolio built entirely from UK main-market shares and you have paid roughly £500 in stamp duty just to get invested — before a single trading fee. The same portfolio built from ETFs and US shares pays close to nothing. Over years of regular investing, the drag compounds.

How can you legally avoid stamp duty on shares?

You cannot dodge SDRT on a UK share you have decided to own — it is baked into the purchase. What you can do is choose instruments that sit outside the charge in the first place. None of this is a loophole; each route is exactly how the rules are written.

Source: SmartInvestor UK, 2026; GOV.UK SDRT UK Listing Relief, 2025.

The honest framing: let tax influence your choice at the margin, never lead it. A quality UK company is still worth owning at 0.5%. But when two routes to similar exposure exist — a UK-listed tracker versus a US-domiciled one — knowing which carries the tax is free money.

What's changing: the 2025 listing relief and the 2027 single tax

Stamp duty on shares is in the middle of its biggest overhaul in years, driven by a push to make UK listings more attractive.

In the Autumn Budget 2025, the government introduced a new UK Listing Relief, effective 27 November 2025. Any company newly listing on a UK regulated market lets investors buy its shares free of the 0.5% SDRT for the first three years after listing. The relief is set to be made permanent once the Finance Bill 2025-26 receives Royal Assent, expected around the end of the first quarter of 2026.

The relief exists because policymakers worry the tax makes London a more expensive place to raise equity than New York, where no equivalent charge applies. A separate change has already landed higher up the chain: the 1.5% charge on issuing shares into a depositary receipt or clearance system was struck down after court rulings and no longer applies to new issuance and capital-raising, surviving only on certain transfers of existing shares.

Looking further out, the plan is not to abolish the tax but to simplify it. The two current taxes — Stamp Duty and SDRT — are due to be replaced by a single, self-assessed 0.5% tax on securities, administered through a new online portal, with the change intended for 2027. The headline rate stays; the paperwork gets modernised.

For scale, HMRC collected £18.3 billion in total stamp taxes in 2024-25, up around 23% year on year — though that figure bundles stamp duty on land, shares and enveloped dwellings together, so it overstates the shares slice on its own. The direction of travel is clear: the tax is being kept, tidied and targeted, not scrapped.

Frequently asked questions

This article is educational content, not tax or investment advice. Stamp-duty rules depend on your circumstances and can change; confirm the current position before you act.