How to transfer shares in a limited company

If you want to sell or give away shares in your limited company, you need to record the transfer properly and update the company’s records. Depending on the value of the shares, there may also be Stamp Duty and other tax implications.

The process is fairly simple for most small companies, but you still need to follow several steps.

First, you must confirm that the transfer is allowed, then complete a stock transfer form and update the company’s records. Stamp Duty may also be payable; it depends on the transfer.

Transferring shares differs from issuing new shares. A transfer moves existing shares from one owner to another. A new share issue increases the number of shares the company has issued.

Can you transfer shares in a limited company?

Usually, yes. A shareholder can sell or give some or all of their shares to another person, subject to any restrictions which apply to the company.

Before agreeing a transfer, check the company’s articles of association and any shareholders’ agreement.

These may restrict transfers or require the shareholder to offer the shares to existing members before selling them to somebody else. These are known as pre-emption rights.

The directors may also have the right to refuse to register a transfer under the company’s articles.

How do you transfer shares?

For a straightforward transfer between two people, the process will usually involve the following steps.

1. Check the company’s articles and any shareholders’ agreement.
2. Agree which shares will be transferred and the price, if any.
3. Complete and sign a stock transfer form.
4. Pay any Stamp Duty due and send the form to HMRC where required.
5. Give the completed transfer documents to the company.
6. Approve and register the transfer under the company’s articles.
7. Update the register of members.
8. Cancel the old share certificate and issue a new one where necessary.
9. Deal with any resulting Companies House and PSC updates.

More complex sales may require extra steps, particularly if the parties use a share purchase agreement or the transfer forms are part of a larger transaction.

Completing a stock transfer form

A stock transfer form records the transfer from the existing shareholder to the new owner.

For ordinary shares which have been fully paid, you will normally use a J30 stock transfer form. A J10 form is generally used for shares which are not fully paid.

The form includes details such as:

• The company name.
• The class and number of shares being transferred.
• The amount paid for the shares, known as the consideration.
• The name and address of the existing shareholder.
• The name and address of the new shareholder.
• The signature of the person transferring the shares.

If no money or other consideration changes hands, for example where shares are given as a gift, you enter Nil as the consideration.

HMRC provides more information in its stock transfer form guidance.

Do you pay Stamp Duty when transferring shares?

Stamp Duty is normally payable when someone buys existing shares using a stock transfer form, and the consideration is more than £1,000.

The rate is 0.5% of the consideration, rounded up to the nearest £5.

For example, if you buy shares for £20,000, the Stamp Duty is £100.

If you buy shares for £1,050, 0.5% comes to £5.25. The amount payable is £10 because Stamp Duty is rounded up to the next £5.

Where the consideration is £1,000 or less, no Stamp Duty is normally payable provided the relevant certificate on the stock transfer form is completed and the transfer is not part of a larger transaction or series of transactions exceeding £1,000.

You can check the current rules in HMRC’s guidance on buying shares using a stock transfer form.

Try our stock transfer stamp duty calculator.

How do you pay the Stamp Duty?

If Stamp Duty is due, you need to pay HMRC and send a copy of the signed and dated stock transfer form to the Stamp Office within 30 days.

HMRC no longer physically stamps the original form. You can email an electronic copy or scan of the signed form and keep the original for your records.

Once HMRC has processed the transaction, it sends confirmation that it has received the Stamp Duty and that the transfer is duly stamped.

Where Stamp Duty is payable, the company should not register the transfer until it has evidence that the transfer has been duly stamped.

HMRC explains the payment process in its Stamp Duty payment guidance.

What if the shares cost £1,000 or less?

If the consideration is £1,000 or less and the transfer does not form part of a larger transaction or series of transactions worth more than £1,000, you can normally complete Certificate 1 on the stock transfer form.

You usually won’t need to pay Stamp Duty or send the form to HMRC for stamping.

Keep the completed form with the company’s records, as you will still need it to record the change of ownership.

What if you give the shares away?

You can transfer shares as a gift rather than selling them.

If the recipient gives no consideration for the shares, you normally don’t have to pay Stamp Duty. Enter Nil in the consideration box on the stock transfer form. HMRC says a no-consideration transfer usually doesn’t need to be sent to it for stamping.

However, even if there is no Stamp Duty to pay, there may be tax considerations.

Giving shares away can have Capital Gains Tax consequences for the person making the gift because CGT rules can use the market value of an asset rather than the amount actually paid, particularly where shares are transferred to a connected person.

There are also circumstances in which tax relief may be available. If the shares have a significant value, check the tax position before making the transfer.

Does the board need to approve the transfer?

Check the terms of the company’s articles of association.

Many private companies give the directors some control over whether a share transfer is registered. If the articles require board approval, the directors should handle the transfer in accordance with the articles and record their decision.

The company should not update its ownership records until it has followed the required procedure and accepted the transfer.

Update the register of members

The register of members is the company’s legal record of its shareholders. The new shareholder becomes the legal owner when the company registers the transfer, rather than simply when the stock transfer form is signed.

Update the details of both the outgoing and incoming shareholder, as appropriate, including the date the transfer took effect.

This is one reason why a signed stock transfer form on its own isn’t the end of the process. The company still needs to register the change properly.

Our guide to company statutory registers explains the records a limited company needs to maintain.

What happens to the share certificates?

The existing share certificate will normally be returned to the company with the stock transfer form. If the shareholder sells their entire holding, the company can cancel the old certificate and issue a new one to the buyer.

For a partial transfer, the company will normally issue a certificate to the new shareholder and a replacement showing the shares the existing shareholder still owns.

Share certificates provide evidence of a shareholding, but the register of members is the legal record of ownership. Keep the old and replacement certificate details with the company’s records.

Do you tell Companies House when shares are transferred?

You do not normally file the stock transfer form itself with Companies House.

The company’s shareholder information and statement of capital are dealt with through the Companies House filing system, including the company’s confirmation statement.

A transfer of existing shares changes who owns them, but it does not by itself change the total number of shares the company has issued.

However, don’t assume that every Companies House update can wait until the next confirmation statement. A share transfer can change who has significant control of the company, and PSC changes have their own reporting requirements.

Check whether the PSC position has changed

A share transfer may also change who counts as a Person with Significant Control (PSC), particularly if someone’s shareholding or voting rights cross a PSC threshold.

Here is an example:

James owns 60% of a company, and Sarah owns 40%. Both are PSCs because each owns more than 25%.

James then transfers 20% of the company to David. The new ownership is:

• James – 40%.
• Sarah – 40%.
• David – 20%.

James and Sarah remain PSCs, while David does not meet the share ownership condition because he owns only 20%.

If James instead transferred 30% to David, both would own 30%, and David would now meet the share ownership condition as well.

See our guide to People with Significant Control (PSC) for the five tests and the Companies House reporting rules.

What tax does the seller pay?

Stamp Duty is generally payable by the buyer, although the seller may also have tax to pay.

If an individual sells shares for more than they cost, they may make a capital gain and have Capital Gains Tax to pay after taking account of available costs, losses, exemptions and reliefs.

Some disposals of shares in a trading company can qualify for Business Asset Disposal Relief where the conditions are met.

The tax position depends on the shareholder and the circumstances of the disposal, so don’t assume the amount received for the shares is the amount on which tax will simply be charged.

Transferring shares isn’t the same as issuing new shares

The distinction matters because the two transactions change the company in different ways.

If Sarah transfers 50 of her 100 shares to David, the company still has 100 shares in issue. Sarah now owns 50, and David owns 50.

If the company instead issues 50 new shares to David, it now has 150 shares in issue. Sarah still owns her original 100 shares, but her percentage ownership has fallen from 100% to two-thirds.

A new share issue therefore affects the company’s share capital, while a straightforward transfer simply changes the ownership of shares which already exist.

Keep the share transfer paperwork

Once the transfer is complete, keep the stock transfer form and any HMRC Stamp Duty confirmation with the company’s records.

You should also retain the board minutes or written decision approving the transfer where applicable, details of cancelled and replacement share certificates, and the updated register of members.

If there was a share purchase agreement or other documentation relating to the sale, keep that too.

Frequently asked questions

Can I transfer shares to my spouse?

Yes, provided the company’s articles and any shareholders’ agreement allow the transfer. Transfers between spouses or civil partners can have different tax consequences from an ordinary sale, so check the position if the shares have a significant value.

Can I transfer shares for £1?

You can sell shares for £1 if that is genuinely the agreed consideration, but using a nominal price does not necessarily make the transaction tax-free. Tax rules can substitute market value in some circumstances, particularly for transactions between connected people.

Can I give shares away for free?

Yes. If you give them away for free, Stamp Duty is normally not payable. Capital Gains Tax may still apply to the person giving away the shares.

Do I send the stock transfer form to Companies House?

No. You normally keep the stock transfer form with the company’s records. If Stamp Duty is payable, you send a copy to HMRC as part of the stamping process. Try our stock transfer stamp duty calculator here.

Do I need an accountant or solicitor to transfer shares?

You don’t need an accountant or solicitor for a straightforward share transfer. However, it’s worth getting advice if the shares are valuable, there are restrictions on transferring them, or you’re unsure about the tax position.

Does a share transfer change the number of shares in the company?

No. A transfer changes the owner of existing shares. The number of shares in issue stays the same.

Before you transfer company shares

Before transferring any shares, check the company’s articles and shareholders’ agreement for any restrictions on the sale or transfer.

Once the transfer is agreed, complete the stock transfer form, deal with any Stamp Duty due, and update the company’s register of members and share certificates.

If the transfer changes who controls more than 25% of the company, you’ll also need to check whether the PSC information at Companies House needs updating. There may also be tax implications for the person selling or giving away the shares.