Shares in a private company are usually transferred by the seller signing a stock transfer form, the buyer paying any Stamp Duty due, and the directors approving the transfer and entering the buyer in the register of members. The buyer does not become the legal owner until the register is updated, and the company has two months from the date the form is lodged to register the transfer or give reasons for refusing it.

Is a transfer the same as issuing new shares?

No. A transfer moves existing shares from one person to another; the company’s share capital does not change and the company receives nothing. Issuing new shares is an allotment, which needs directors’ authority, the statutory pre emption procedure and a return of allotment, as explained in allotting shares. The statutory pre emption right in section 561 of the Companies Act 2006 applies to allotments of equity securities, not to transfers. Any right of existing shareholders to buy shares that another member wants to sell comes only from the articles or a shareholders’ agreement.

Section 544 provides that shares are transferable “in accordance with the company’s articles”, so the articles are always the starting point.

What does the stock transfer form need to show?

Section 770 prevents a company registering a transfer unless a “proper instrument of transfer” has been delivered to it (with limited exceptions, such as transfers by operation of law). For a private company this is almost always a stock transfer form. Article 26(1) of the Model Articles for private companies allows an instrument “in any usual form or any other form approved by the directors”, executed by or on behalf of the transferor.

HMRC’s guidance on completing a stock transfer form says it must show:

  • the shares being transferred, by quantity, class and type (for example 100 ordinary shares in ABC Limited);
  • the buyer’s name and address;
  • the seller’s name and the address of the registered holder;
  • the consideration in pounds sterling, whether cash, other shares or debt assumed or released, or “Nil” if nothing is given.

Where the consideration is worked out in a share purchase agreement, the form should say so and a copy of the agreement goes to HMRC with it.

When is Stamp Duty payable?

Stamp Duty on a paper transfer is 0.5% of the consideration, rounded up to the nearest £5, and is payable only where the consideration is more than £1,000. Where duty is due, the form must be sent to HMRC within 30 days of being signed and dated, and the duty paid within the same 30 days. HMRC now takes forms by email to stampdutymailbox@hmrc.gov.uk; since 25 March 2020 a form on which duty has been paid under the new procedure counts as duly stamped, and physical stamping has been withdrawn.

The back of the form carries two certificates. Certificate 1 is used where the consideration is £1,000 or less and the transfer is not part of a larger transaction or series of transactions totalling more than £1,000. Certificate 2 is used where the transfer is exempt, for example on divorce. HMRC’s guidance on reliefs and exemptions lists gifts for no consideration and shares left in a will as exempt, with nothing to send to HMRC. Reliefs such as group relief must be claimed from HMRC even when they reduce the duty to nil.

Illustration only. Priya sells 300 shares to Tom for £1,050. Duty at 0.5% is £5.25, which rounds up to £10. Priya and Tom sign the form on 1 March, so the scanned form must be emailed to HMRC and the £10 paid by 31 March. If Priya instead gave Tom the shares for nothing, the form would show “Nil” and would go straight to the company with no Stamp Duty.

Do the directors have to approve the transfer?

Under article 26(5) of the Model Articles the directors may refuse to register a transfer, and if they do the form must be returned to the transferee with the notice of refusal unless they suspect fraud. Many bespoke articles narrow or widen this discretion, for example by obliging the board to register transfers to family members or requiring a pre emption process first.

Section 771 then sets a firm timetable. Once a transfer is lodged, the company must register it or send the transferee notice of refusal with its reasons “as soon as practicable and in any event within two months”. A transferee who is refused can ask for further information about the reasons, though not copies of board minutes. Failure to comply is an offence by the company and every officer in default. Under article 26(4) the seller remains the holder until the buyer’s name is entered in the register, so dividends declared in the meantime belong to the registered holder unless the parties agree otherwise between themselves.

How do pre emption rights on transfer work?

Pre emption on transfer is purely contractual, so the procedure is whatever the articles or shareholders’ agreement say. A typical clause requires a member who wants to sell to serve a transfer notice on the company, offers the shares to the other members pro rata at a fair value set by agreement or by an independent valuer, and allows sale to an outsider only if the members do not take them up within a set period. Many also include “deemed transfer” triggers on events such as leaving employment or bankruptcy, and permitted transfers to spouses or family trusts that bypass the process.

If the procedure is ignored, the directors should normally refuse registration, and a shareholder who was denied the offer may have a claim. The rights of the other shareholders are part of the picture whenever a sale is proposed.

What needs updating after the transfer?

  • Register of members. Enter the new holder, the date they became a member, the shares held by number and class and the amount paid, and the date the seller ceased to be a member if they sold everything (section 113); see statutory registers.
  • Share certificates. Section 776 requires the company to have new certificates ready for delivery within two months after a duly stamped or exempt transfer is lodged. The old certificate is cancelled.
  • Board minutes. Record approval of the transfer, the registration and the issue of certificates.
  • People with significant control. If anyone crosses or falls below a PSC threshold, Companies House must be told within 14 days of the change being confirmed; see persons with significant control.
  • Confirmation statement. Changes in shareholder information are reported in the additional information section of the next confirmation statement. There is no separate Companies House form for a share transfer.

What are the tax effects for the seller and buyer?

For capital gains tax the seller has made a disposal. Section 17 of the Taxation of Chargeable Gains Act 1992 treats a gift or other transfer not at arm’s length as made at market value, and section 18 treats transfers between connected persons as not at arm’s length, so a gift to a child is taxed as if sold at market value. Transfers between spouses or civil partners who live together are on a no gain, no loss basis under section 58. Where shares in a trading company are given away, gift holdover relief may defer the gain. If the transferee is an employee or director, the employment related securities rules may also need checking.

What mistakes cause problems later?

  • Writing a “Nil” consideration on a form when money changed hands, which misstates the Stamp Duty position.
  • Missing the 30 day deadline for sending dutiable forms to HMRC and paying the duty.
  • Updating the confirmation statement but never entering the transfer in the register of members, which is the document that actually makes the buyer a member.
  • Ignoring pre emption clauses in the articles because “everyone agreed”, leaving the transfer open to later challenge.
  • Forgetting the PSC notification when a transfer changes who controls the company.
  • Transferring shares to a spouse or child to shift dividends without considering the settlements legislation.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.