Explainerone question answered

Stamp duty reserve tax is the 0.5% you pay without noticing

Fahad ZarCrypto tax accountant. MSc Accounting and Finance, BPP University London. Four years reconciling wallet and exchange histories for UK and US filings.

Published 25 August 2026· Reviewed against gov.uk 25 August 2026· 4 min read·Capital gains tax

Every time you buy shares in a UK company through a broker app, a tax is collected that most investors have never consciously paid. Stamp duty reserve tax takes 0.5% of the purchase price on electronic transactions, rounded into the settlement so smoothly that it reads as part of the price, per GOV.UK. Buy £10,000 of shares and £50 has gone before the shares are yours.

Its older sibling, stamp duty, still exists for paper transactions, share purchases on a stock transfer form pay it once the deal tops £1,000. Nearly everything retail is electronic now, so SDRT is the one that actually touches you.

You cannot avoid SDRT on UK shares and you do not need to, you need to keep the contract notes, because every half percent paid going in reduces the gain taxed coming out.

What you pay it on

The charge lands on buying existing shares in UK incorporated companies, options over them, interests in them, and foreign companies that keep a share register in the UK. The seller pays nothing, this is a buyer’s tax. It is charged on the price you pay, not the market value, in the ordinary case.

What escapes it

New issues do not pay, subscribe in an IPO or a new funding round and there is no SDRT. Gifts of shares for nothing do not pay. Buying units in a unit trust or shares in an OEIC from the fund manager does not pay, which is why ordinary index fund investing avoids the charge even outside an ISA. Foreign shares bought outside the UK with no UK register are outside the net entirely, US shares on a US exchange carry no UK stamp taxes at all.

Crypto sits outside too. Whatever else crypto trading costs in tax, there is no SDRT on it, the charge is a securities tax and tokens are not shares.

The 1.5% rate, briefly

Transfers into some depositary receipt schemes and clearance services are charged at 1.5% rather than 0.5%. Retail investors mostly meet this through corporate actions rather than choices, but if a transfer you are making touches a depositary structure, the tripled rate is worth knowing before rather than after.

Where it meets capital gains tax

SDRT is not lost money for tax purposes. It is a cost of acquisition, which means it joins your cost basis and reduces the gain you are taxed on when you sell. On a £10,000 purchase, the £50 SDRT makes your base cost £10,050. Small on one trade, meaningful across a portfolio’s life, and exactly the kind of allowable cost that the capital gains computation is built from. Keep the contract notes, they carry the number.