Fundamentally, shares are a form of property as they are parts of ownership of a company. As stated in the Companies Act of 2006, these shares can be transferred or sold to other people.
The reason for transferring or selling shares is up to the person in ownership of those shares. For example, they could sell their shares for profit or in the trade of goods and services. They could also give shares to family members as a gift.
There may be restrictions on transferring shares. Therefore, the director should always check both the shareholders agreement and the articles of association before allowing the transferral of shares to take place. For example, pre-emption rights give the right for shares to be given to an individual before they can be offered to any other person.
In order to transfer shares of a company a stock transfer form (also known as form J30) must be filled out. Our stock transfer form can be used for fully paid shares or stock transfers. These are the most common forms of share transfer.
If you use a stock transfer for to buy stocks and shares for £1,000 or less you do not normally have to pay any Stamp Duty.
Completing the form
When you complete a stock transfer form you need to give all the details of the sale including:
- the shares being transferred (the quantity, class and type, for example 100 ordinary shares, ABC Limited)
- the buyer
- the seller
You also need to provide the value of what you paid for the shares in:
- other stock and shares
This is known as the chargeable consideration. You can either enter “Nil” if you do not give any consideration for the shares, or if you have given money you need to state how much.
If you have used something other than money, such as shares as consideration you need to state what you have given. For example, 100 ordinary shares in XYZ Limited, debt assumed £20,000.
If the transfer is exempt from Stamp Duty , or no chargeable consideration is given for the transfer, you need to complete one of the certificates on the back of the stock transfer form. You need to complete a different certificate depending on what you paid for the shares.
You should complete certificate 1 if:
- consideration you give for the shares is £1,000 or less
- the transfer does not form part of a larger transaction or series of transactions where the total exceeds £1,000
You should complete certificate 2 on the back of the form if:
- the transfer is exempt from Stamp Duty, for example, transfers in connection with divorce or the dissolution of a civil partnership
- the consideration given is not chargeable consideration
No certificate needed
You do not need to fill in either certificate where no consideration is given for the shares or if you’re claiming a relief from Stamp Duty.
If you’re claiming a relief you’ll need to send the completed stock transfer form, together with details of the relief you’re claiming to HMRC for them to consider the relief claim.
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What happens after you submit
No stock transfer forms are currently being stamped by HMRC due to coronavirus.
Instead, once they have checked your form and confirmed they have received payment you will recieve an email containing the following information:
- confirm receipt of Stamp Duty
- detail the transactions we are confirming receipt for and the reference codes
- give assurance that HMRC will not pursue a penalty against the Registrar for registering the new ownership of the shares
Once you have recieved this information you must send it to the registrar of the company you have bought shares in along with the stock transfer form and share certificate.
The address of the registrar is on the share certificate. The registrar will then issue you with your own share certificate.
If you’re submitting a form SH03 to Companies House, you should include a copy of the letter with the certificate.
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