Stamp duty is payable on the majority of stocks on FTSE 100 or FTSE 250.
You pay stamp duty when you buy shares listed on the FTSE market and it is charged at 0.5% of the total value of the stock (excluding any broker fee etc) you are buying. And that means any profit you may make on the stock will already be reduced by the amount you pay as stamp duty. And if you make a loss, the stamp duty will make it bigger.
For example, buying 1000 shares of a particular company at a price of £2.50 each will actually cost more because you will be paying £2500 (£2.50 x 1000) for the stock + £12.50 in stamp duty (£2500 x 0.5%) pushing the overall cost to £2522.50. And if you have to pay any broker’s fee, the final amount will even be bigger. So not paying stamp duty can push up your total profit and bring down your expenses.
Not all UK shares or shares bought in the UK have stamp duty.
The good news is that there are some stocks listed on the UK market which do not incur any stamp duty. For example, from 28 April 2014 shares bought of an AIM-listed company do not have stamp duty to pay. The AIM market is made up of companies that are smaller in size and have been categorized as “growing companies”.
List of UK shares without stamp duty
These are some of the companies that are listed under the London Stock Exchange and are exempt from stamp duty.
Glencore Ticker: Glen
Experian plc Ticker: EXPN
International Consolidated Airlines Grp Ticker: IAG
Petrofac Ticker: PFC
Polymetal International Ticker: POLY
Genel Energy Ticker: GENL
Playtech PLC Ticker: PTEC
Phoenix Group Holdings Ticker: PHNX
3i Infrastructure PLC Ticker: 3IN
Hiscox Ltd Ticker: HSX
Lancashire Holdings Ticker: LRE
BH Macro Ltd Ticker: BHMG
UK Commercial Property Trust Limited Ticker: UKCM
Ferguson Plc Ticker: FERG
IWG PLC Ticker: IWG
Centamin PLC Ticker: CEY
Newriver Reit PLC Ticker: NRR
Why some stocks do not have stamp duty on them?
Stamp duty is only payable if the company that one is buying shares from is incorporated or based in the UK. Basically, a foreign company is exempt from stamp duty as it does not maintains its shareholders register in the UK.
How do I know if a company is exempt from stamp duty?
Usually, if you are paying stamp duty on a particular stock, the amount of stamp duty will be shown to you at the time of purchase.
How to avoid stamp duty on shares?
A little bit of research online can show plenty of results of shares that are exempt from UK stamp duty. As well as the UK AIM market, if you are buying shares from any foreign exchanges such as the US, or Europe, the stamp duty will not be payable.
Is there stamp duty on selling shares?
No. Stamp duty on the UK shares is only payable when you are buying them.