Stamp duty on a company buying its own shares

Q: What is the process and timetable for the SH03?

Two deadlines run side by side. Companies House. Section 707 of the Companies Act 2006 requires the return within 28 days beginning with the date the shares are delivered to the company. Failure is an offence by every officer in default. HMRC. Stamp duty must be paid and the document sent to HMRC within 30 days of being signed and dated. STSM021260 makes the date the SH03 is signed the date of execution for stamp duty, not the dates the shares were delivered. Where duty is payable the order is fixed. STSM021260 says the duty must be paid and the SH03 stamped by HMRC before it is submitted to Companies House. In practice the company: completes and signs the SH03, showing the duty in the stamp duty section pays HMRC by bank transfer using a reference made up of the payer's name and the amount emails stampdutymailbox@hmrc.gov.uk with the payment reference, amount and date and a scanned copy of the signed SH03 receives HMRC's letter confirming the duty, and files the SH03 at Companies House with that letter. HMRC's guidance on stock transfer forms asks people to allow 20 working days for a submission to be dealt with. That can use up most of the 28 day Companies House window, so the SH03 should be signed and sent to HMRC as soon as the shares are delivered. The HMRC letter is not shown on the public register.

Q: Which reliefs can apply to a buyback?

Group relief. Where a 75% subsidiary buys some of its own shares from its parent, the SH03 can qualify for relief under section 42 of the Finance Act 1930, provided the purchase is not part of an arrangement caught by section 27(3) of the Finance Act 1967 (STSM042250). The claim goes to HMRC with the SH03; see stamp duty group relief for share transfers. Treasury shares. Duty is paid when shares go into treasury. A later sale or transfer of treasury shares by the company is not chargeable to the 0.5% stamp duty (paragraph 1(5) of Schedule 13 to the Finance Act 1999), and cancelling treasury shares on form SH05 does not attract duty (STSM021260, STSM075030).

When a company buys back its own shares, section 66 of the Finance Act 1986 treats the SH03 return the company files at Companies House as if it were a stock transfer to the company, so stamp duty of 0.5% is due on the price paid, rounded up to the nearest £5. If the total price is £1,000 or less and the company signs the certificate on the form, no duty is due and the SH03 goes straight to Companies House; otherwise the duty is paid and the form emailed to HMRC first, and HMRC’s confirmation letter is filed with it.

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Why is stamp duty charged when a company buys its own shares?

Stamp duty is a tax on documents. In a buyback the seller often signs nothing that looks like a transfer, and the shares are cancelled or put into treasury rather than registered in a new name. Parliament dealt with this in section 66 of the Finance Act 1986. Where a company purchases its own shares under section 690 of the Companies Act 2006, the return it must deliver to the registrar under section 707 is charged with stamp duty as if it were an instrument transferring those shares on sale to the company.

That return is form SH03. HMRC’s Stamp Taxes on Shares Manual confirms at STSM075020 that the SH03 is the chargeable document, and that if a stock transfer form is also used to move the shares to the company, that form is not chargeable as well, because paragraph 1(4) of Schedule 13 to the Finance Act 1999 takes it out of charge. Any stamp duty reserve tax charge on the agreement to buy is cancelled under section 92(1C) of the Finance Act 1986 once stamp duty has been paid on the SH03 and it has been delivered.

The charge applies however the company funds the purchase, whether from distributable profits, a fresh issue of shares or, for a private company, a payment out of capital. The company law steps are set out in company purchase of own shares; this page deals only with the stamp duty.

How much stamp duty is due on a buyback?

The rate for transfers of stock or marketable securities is 0.5%, set by paragraph 3 of Schedule 13 to the Finance Act 1999. It is charged on the consideration, meaning the price the company pays, not the nominal value of the shares.

One SH03 can report several purchases, each on its own line. STSM021260 says the duty is calculated on the aggregate amount paid for all the shares on the form, whether cancelled or taken into treasury, and the result is rounded up to the nearest £5. The SH03 itself carries the same instruction.

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When does the £1,000 exemption apply?

Paragraph 1(3A) of Schedule 13 to the Finance Act 1999 removes the charge on a transfer of stock or marketable securities where the consideration is £1,000 or less and the instrument is certified at £1,000. On the SH03 this means ticking the statement that the transaction does not form part of a larger transaction or series of transactions where the total consideration exceeds £1,000. Companies House guidance confirms that only an SH03 above the £1,000 threshold has to go to HMRC first; a certified form is returned directly to Companies House.

The certificate looks at the whole arrangement. A company that buys out one shareholder in several small tranches under a single agreement cannot certify each tranche at £1,000 if the total is higher. The SH03 also has a separate certificate for a repurchase by a qualifying asset holding company, which HMRC says at STSM075020 is exempt from stamp duty and stamp duty reserve tax where the conditions are met.

What is the process and timetable for the SH03?

Two deadlines run side by side.

Companies House. Section 707 of the Companies Act 2006 requires the return within 28 days beginning with the date the shares are delivered to the company. Failure is an offence by every officer in default.
HMRC. Stamp duty must be paid and the document sent to HMRC within 30 days of being signed and dated. STSM021260 makes the date the SH03 is signed the date of execution for stamp duty, not the dates the shares were delivered.

Where duty is payable the order is fixed. STSM021260 says the duty must be paid and the SH03 stamped by HMRC before it is submitted to Companies House. In practice the company:

completes and signs the SH03, showing the duty in the stamp duty section
pays HMRC by bank transfer using a reference made up of the payer’s name and the amount
emails stampdutymailbox@hmrc.gov.uk with the payment reference, amount and date and a scanned copy of the signed SH03
receives HMRC’s letter confirming the duty, and files the SH03 at Companies House with that letter.

HMRC’s guidance on stock transfer forms asks people to allow 20 working days for a submission to be dealt with. That can use up most of the 28 day Companies House window, so the SH03 should be signed and sent to HMRC as soon as the shares are delivered. The HMRC letter is not shown on the public register.

What does the calculation look like?

Illustration only. A private company buys 2,000 shares from a retiring director for £84,250 and cancels them. Duty is 0.5% of £84,250, which is £421.25, rounded up to £425. The SH03 is signed on the day the shares are delivered, the £425 is paid, the form is emailed to HMRC the same day, and the SH03 goes to Companies House with HMRC’s letter when it arrives.

In the same month the company buys 200 shares from a departing employee for £900 under a separate, unconnected agreement. If that purchase is reported on its own SH03, the £1,000 certificate can be signed and the form sent straight to Companies House. If both purchases were reported on one SH03, duty would be calculated on the combined £85,150, giving £425.75 rounded up to £430.

Which reliefs can apply to a buyback?

Group relief. Where a 75% subsidiary buys some of its own shares from its parent, the SH03 can qualify for relief under section 42 of the Finance Act 1930, provided the purchase is not part of an arrangement caught by section 27(3) of the Finance Act 1967 (STSM042250). The claim goes to HMRC with the SH03; see stamp duty group relief for share transfers.
Treasury shares. Duty is paid when shares go into treasury. A later sale or transfer of treasury shares by the company is not chargeable to the 0.5% stamp duty (paragraph 1(5) of Schedule 13 to the Finance Act 1999), and cancelling treasury shares on form SH05 does not attract duty (STSM021260, STSM075030).

What happens if the SH03 is sent to HMRC late?

HMRC’s published penalties for documents submitted late for stamping on or after 1 October 2014 are:

Delay after the 30 day deadline	Penalty
Up to 12 months	10% of the duty, capped at £300
12 to 24 months	20% of the duty
More than 24 months	30% of the duty

HMRC does not charge a penalty below £20, rounds penalties down to the nearest £5, and may charge more where a delay of 12 months or more was deliberate. Interest runs daily on late paid duty, but is not charged if it comes to less than £25 for a document. A penalty can be cancelled only for a reasonable excuse. Overpaid duty can be reclaimed within two years of the date of the stamped document.

What mistakes come up with stamp duty on buybacks?

Filing the SH03 at Companies House before HMRC has confirmed the duty.
Calculating duty on nominal value instead of the price paid, or forgetting to round up to the next £5.
Counting the 30 days from the date the shares were delivered rather than the date the SH03 was signed, or signing the SH03 weeks after delivery and then missing the 28 day Companies House deadline.
Paying duty on a stock transfer form as well as the SH03.
Signing the £1,000 certificate where the purchase is one of a connected series above £1,000.
Confusing the stamp duty with the seller’s own tax position, which is a separate question covered in share buybacks: capital or income.

The accounting entries, including the capital redemption reserve, are in accounting for a purchase of own shares, and the wider rules for ordinary share sales are in stamp duty on share transfers.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.