You can transfer shares of your limited company to others. Generally, transfer of shares take place within a private limited company when:
- Your limited company become subsidiary or associated company of another company.
- Agreement between family members.
- Agreement between business partners.
Universally, you must complete a stock transfer form to officialise your transfers. Additionally, you also require to register the transfers with Companies House and also pay stamp duty.
Stock transfer form
Ordinarily, you require the following information to complete your stock transfer form:
- Quantity of shares to be transferred such as 1000 shares.
- Type and class of shares being transferred like Ordinary shares.
- The consideration is the price you paid for the shares, if you paid nothing for it then specify “NIL”.
- The buyer’s details called the Transferee.
- The seller’s details called the Transferor.
Accordingly, the transferor and transferee must sign the stock transfer form. Thereafter, you send the form to HMRC within 30 days for stamping. Concurrently, you must pay the Stamp duty to HM Revenue and Customs if applicable.
Consequently you issue new share certificate to the new shareholder.
You would require to complete Certificate 1 on the back of the Stock Transfer Form if the price you pay for your shares is £1000 or less. The transfer must not be or part of a series of shares transfers where the total would exceeds £1000.
Certificate 2 is to be completed if your transfer is exempt from Stamp duty. For examples, the transfer is part of a divorce or civil partnership dissolution. In this situations, your consideration given is not chargeable consideration.
No certificate needed
If you pay nothing for your shares or if you are claiming a relief from Stamp Duty. If you are claiming a relief you will need to send your completed stock transfer form, together with details of the relief you are claiming to HMRC for stamping.
Reliefs exempt from stamp duty
The reliefs available include:
- Intra-group relief
- Acquisition relief
- Reconstruction relief
- Sales to intermediaries
- Repurchases and stock lending
- Transfers to charities
Stamp duty on shares
You would require to pay stamp duty on your shares transfers if the consideration is more than £1000.
You pay stamp duty at the rate of 0.5% of the value of your chargeable consideration, rounded up to the nearest £5 on each shares transfer form to be stamped.
Pay Stamp duty to HMRC during COVID-19 outbreak
HMRC has put in COVID-19 secure measures in place to stop the spread of the coronavirus (COVID-19) and temporarily requires payment on stamp duty by electronic payments and send in documents by email.
Inform Companies House
You must also inform Companies House of this event by filing relevant Companies House forms and include this information when submitting your confirmation statement.