stamp duty

A tax imposed on the buying of shares and property. As far as shares are concerned, the tax is collected by brokers on behalf of their clients, and appears on the contract note which they send out to clients when they buy shares.

Currently, stamp duty on share purchases applies at the rate of 0.5%. Note that it only applies to purchases and not to sales. Private investor groups and brokers are lobbying for the abolition of stamp duty. They note that there is no stamp duty in the USA which makes it cheaper to trade there and that, in an international market of online trading, UK brokers could lose out to American-based brokers.

Stamp duty on property purchases applies on a sliding scale according to the purchase price. For property over £60,000 it is 1%, over £250,000 it is 3%, and over £500,000 it is 4%.

In November 2001, the government raised the first band to £150,000 for 2,000 deprived areas in the UK in a bid to encourage investment.