invest in an ‘open ended investment company’ (the trust or company pays the tax, so you don’t have to)
Buying shares electronically
Tax is automatically charged if you buy shares electronically (through the ‘CREST system’). This tax is known as Stamp Duty Reserve Tax (SDRT).
Tax will be automatically charged at 0.5% when you buy shares through a stockbroker, as it’s a paperless transaction.
Using a stock transfer form
You’ll have to pay Stamp Duty if you use a stock transfer form to buy shares and the transaction is over £1,000. A stock transfer form is classified as a paper transaction.
You pay 0.5% duty, which will be rounded up to the nearest £5.
‘Depositary receipt schemes’ or ‘clearance services’
You’ll have to pay tax at 1.5% if you transfer shares into some ‘depositary receipt schemes’ or ‘clearance services’. This is when the shares are held by a third party and can be traded free of Stamp Duty or SDRT. Not all schemes work like this though - with some of them you pay tax like you would for paperless or paper transactions.