After you register a company it is important that you understand the charges and taxes that you will be dealing with when setting up a company. Stamp taxes have been charged since the seventeenth century. Stamp duties and taxes are administrated by HMRC Stamp taxes. There are three types of stamp taxes; stamp duty, stamp duty reserve tax and stamp duty land tax.

 Stamp duty

 Stamp duty is a fixed charge on documents. Duty is not payable if there are no documents to be charged. Stamp duties apply to:

• Transfer of stock and marketable securities. The rate of stamp duty is 0.5% (de minimum limits apply)
• Bearer instruments issued in the UK or by a UK set up company. The stamp duty rate is 1.5%.
• Bearer instruments in a non-UK set up company. The stamp duty rate is 0.2%
• The issue of depository receipts or shares put into a duty free clearance system. The rate of stamp duty is 1.5%

 The adjudication of how much stamp duty is to be paid is assessed by the Stamp office. They will decide the amount you will have to pay and if there are to be any penalties for late payment.

 Normally if a document is submitted late for stamping then interest or a penalty will be paid on the document. The penalty could be up to £300 for late documents or £3000 in cases of fraud.

 Stamp duty reverse tax (SDRT)

 The stamp duty reverse tax was introduced in 1986 to cover share transactions that escaped stamp duty. This stamp tax is mainly dealt with by stock exchange brokers. Stamp duty reverse tax is at a rate of 0.5% and applies to:

• Share transactions that escape stamp duty. These could be sales of renounceable letters of allotment and transactions that happen within the same stock exchange.
• Transfers of units in unit trust schemes. This could also include shares in open ended investment companies.
• Transfers of foreign currency bearer shares.

 Similarly to duty stamp there are interest and penalties to be paid for late payment. The penalties for SDRT are lower than stamp duty and can reach a payment of £100 and then £60 a day for every day it is not paid.

 Stamp duty land tax (SDLT)

 Stamp duty land tax was introduced in 2003 to charge tax on transactions relating to UK land. The tax is still paid whether or not any of the party is a resident of the UK and whether or not any document was used in the transaction.

 The rate of SDLT depends on the price of the property and can vary from 1% to 5%.  There is also a nil rate band for lower value transactions.

 SDLT applies to both lease premiums and to the rental element of a lease. The SDLT payable on renting of leases is 1% of the excess of the net present value of the rental payments. If you increase the rent within the first 5 years then it is treated as the grant of a new lease. Once the first 5 years have passed then an increase will not change the lease.

 If you are setting up a company and need more information on Stamp taxes then you can visit the HMRC website at www.hmrc.gov.uk.

 For more information on company formation and for help forming you company please contact our support team on 0844 893 0808.