Stamp Duty Reserve Tax (SDRT) Guide 2026
Understanding Stamp Duty Reserve Tax (SDRT) — the 0.5% tax on electronic share and securities transfers, how it differs from SDLT, and available exemptions.
What is Stamp Duty Reserve Tax
Stamp Duty Reserve Tax (SDRT) is a tax on the electronic purchase of shares and certain securities. It was introduced in 1986 to modernize the stamp duty regime for paperless share trading.
Key Point:
SDRT is charged at 0.5% of the purchase price when you buy UK shares electronically. It's automatically collected by your broker or trading platform.
Despite the similar name, SDRT is completely separate from Stamp Duty Land Tax (SDLT), which applies to property purchases. SDRT specifically targets share and securities transactions.
Who Pays SDRT?
- Anyone buying UK shares electronically
- Institutional investors purchasing securities
- Retail investors using online brokers
- Buyers of exchange-traded funds (ETFs) containing UK shares
SDRT vs SDLT vs Stamp Duty on Shares
The "stamp duty" family includes three different taxes that are often confused:
1. Stamp Duty Reserve Tax (SDRT)
- What: Tax on electronic share purchases
- Rate: 0.5% of purchase price
- When: Automatic on paperless share trades
- Collection: By broker via CREST system
2. Stamp Duty on Shares
- What: Tax on physical share certificate transfers
- Rate: 0.5% of purchase price (rounded up to nearest £5)
- When: When you receive a paper stock transfer form
- Collection: You pay within 30 days via HMRC Stamp Office
3. Stamp Duty Land Tax (SDLT)
- What: Tax on property and land purchases
- Rate: 0% to 12% in tiered bands
- When: Buying residential or commercial property in England/NI
- Collection: Solicitor files return and pays within 14 days
Important Distinction:
This website focuses on SDLT (property tax). SDRT is an entirely different tax. You cannot use an SDLT calculator for share purchases — the 0.5% SDRT rate is fixed regardless of purchase amount.
The 0.5% Rate on Shares
SDRT is charged at a flat rate of 0.5% of the transaction value. Unlike SDLT, there are no bands or thresholds — the 0.5% applies to the entire purchase amount.
Calculation Examples
Example 1: Small Purchase
Buy £1,000 of shares
SDRT: £1,000 × 0.5% = £5.00
Example 2: Medium Purchase
Buy £10,000 of shares
SDRT: £10,000 × 0.5% = £50.00
Example 3: Large Purchase
Buy £100,000 of shares
SDRT: £100,000 × 0.5% = £500.00
Key Features
- No rounding (calculated to exact pence)
- Charged on gross transaction value (before fees/commission)
- No minimum or maximum thresholds
- Cannot be avoided on standard UK share purchases
When SDRT Applies
SDRT is triggered when you purchase shares or securities electronically, including:
Transactions Subject to SDRT
- UK company shares listed on the London Stock Exchange
- Foreign company shares that maintain a UK share register
- Rights to shares (e.g., options to acquire shares)
- Units in UK unit trusts
- Some ETFs depending on structure and underlying assets
Timing
SDRT becomes due on the date you agree to purchase the shares, not when settlement occurs. However, the tax is typically collected during the settlement process (usually T+2, meaning two business days after the trade).
Typical Timeline
Day 1 (Trade date): You buy shares via broker
Day 1: SDRT liability is created
Day 3 (Settlement date): Shares delivered, payment made, SDRT collected
Exemptions from SDRT
Several types of transactions are exempt from SDRT:
Full Exemptions
- UK Government Gilts: Government bonds are exempt from SDRT
- AIM Shares (historical): Alternative Investment Market shares were exempt until 28 April 2014. Purchases after that date incur SDRT.
- Foreign shares on overseas exchanges: Shares traded and settled outside the UK typically aren't subject to SDRT
- Gifts with no consideration: If shares are transferred as a gift with no money changing hands, there's no SDRT
- Transfers between spouses: No SDRT when shares are transferred between married couples or civil partners as a gift
Corporate Transactions
Certain corporate restructuring and takeover scenarios have different rules. For example, share-for-share exchanges in mergers may have relief provisions.
Good to Know:
ISAs (Individual Savings Accounts) and SIPPs (Self-Invested Personal Pensions) do not provide SDRT exemption. You still pay 0.5% SDRT when buying shares inside these tax-efficient wrappers, though you benefit from income tax and capital gains tax advantages.
CREST and Electronic Transfers
CREST is the UK's electronic settlement system for share transactions. It's operated by Euroclear UK & International and handles the majority of UK share trades.
How CREST Works with SDRT
- When you buy shares electronically, the trade is settled through CREST
- CREST automatically calculates the 0.5% SDRT liability
- Your broker or platform collects the SDRT from you
- CREST remits the tax to HMRC on your behalf
This process is seamless. As an individual investor, you simply see the 0.5% charge added to your purchase cost. There's no need to file a tax return or contact HMRC directly.
Example: Online Broker Purchase
Share purchase: £5,000
Broker commission: £10
SDRT (0.5%): £25
Total cost: £5,035
The £25 SDRT is automatically collected and passed to HMRC via CREST.
Dematerialized Holdings
Most UK shares are now held in dematerialized (electronic) form within CREST. This means no physical share certificates exist, and all transfers are subject to SDRT rather than traditional stamp duty on physical certificates.
How SDRT is Collected
SDRT collection is fully automated for electronic trades. Here's how it works:
Collection Process
- Trade execution: You place an order to buy shares through your broker
- SDRT calculation: The system automatically calculates 0.5% of the purchase price
- Settlement: On T+2 (two days after trade), shares and cash are exchanged
- SDRT deduction: Your broker debits the SDRT amount from your account
- Remittance to HMRC: CREST collects and remits SDRT to HMRC on behalf of all buyers
No Tax Return Required:
Unlike SDLT (where your solicitor files a return), SDRT is collected at source. You don't need to file any paperwork or contact HMRC. The charge simply appears on your broker statement.
Physical Share Certificates
If you buy shares and receive a physical stock transfer form (now rare), you pay stamp duty on shares instead of SDRT. You must:
- Calculate 0.5% of the purchase price (rounded up to nearest £5)
- Submit the stock transfer form to HMRC's Stamp Office
- Pay the stamp duty within 30 days
Common Questions
Can I avoid SDRT by buying in an ISA or SIPP?
No. SDRT is charged on the purchase of shares regardless of the account type. ISAs and SIPPs provide income tax and capital gains tax benefits, but not SDRT relief. You still pay 0.5% when buying UK shares within these accounts.
Do I pay SDRT when I sell shares?
No. SDRT is charged only on purchases, not sales. When you sell shares, the buyer pays the SDRT. You may be liable for capital gains tax on any profit, but that's a separate tax.
Is SDRT charged on US or international shares?
Generally no. Shares of foreign companies traded and settled on overseas exchanges (e.g., US stocks on NYSE or NASDAQ) are not subject to UK SDRT. However, some foreign companies maintain a UK share register, in which case SDRT may apply. Check with your broker.
What about ETFs and investment trusts?
UK-domiciled investment trusts are subject to SDRT when you buy shares. For ETFs, it depends on structure: UK-domiciled ETFs usually incur SDRT, while Irish or Luxembourg-domiciled ETFs typically do not (though they may have other transaction costs).
Can I claim SDRT back?
In most cases, no. SDRT is a final tax on the transaction. However, if SDRT was charged in error (e.g., on an exempt transaction), you can apply to HMRC for a refund within specified time limits.
Looking for Property Stamp Duty?
This page covers Stamp Duty Reserve Tax (SDRT) on shares. For stamp duty on property purchases (SDLT), use our calculators.
Go to SDLT CalculatorsEmma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.