How to Transfer Shares in a UK Company

A share transfer is the process of moving ownership of shares from one person (the transferor) to another (the transferee). In a UK limited company, shares are personal property and can be transferred – subject to any restrictions in the company’s articles – by completing a stock transfer form and updating the company’s registers.

When Shares Are Transferred

Common reasons for transferring shares include:

Sale of shares to a new or existing shareholder
Gift of shares to a family member
Transfer to a trust or pension scheme
Management buyout – directors purchasing shares from departing shareholders
Death of a shareholder – personal representatives transfer shares to beneficiaries
Divorce – court-ordered transfer between spouses

Step 1: Check the Articles of Association

Before any transfer, check the company’s articles for restrictions on transfer. Most private company articles based on the Model Articles include a provision requiring directors’ approval before shares can be transferred.

Common restrictions include:

Restriction	Effect
Directors’ power to refuse	The board can decline to register a transfer
Pre-emption rights	Existing shareholders have first refusal before shares are offered externally
Compulsory transfer provisions	Shares must be offered to other shareholders on certain trigger events (death, bankruptcy, loss of employment)
Tag-along and drag-along rights	Minority/majority shareholders can join or compel a sale

If the company has a shareholders’ agreement , check this too – it may contain additional transfer restrictions that sit alongside the articles.

Step 2: Agree the Transfer Price

The price paid for the shares is agreed between the parties. For transfers between connected parties (family members, fellow shareholders), HMRC may substitute market value for tax purposes if the price is below market value.

Common valuation approaches:

Method	Used When
Net asset value	Straightforward company with tangible assets
Earnings multiple	Trading company with established profits
Discounted cash flow	Company with predictable future revenue
Agreed formula	Pre-agreed in the shareholders’ agreement
Nominal value	Initial subscription or gift (stamp duty still applies on consideration given)

Step 3: Complete the Stock Transfer Form

The stock transfer form (form J30) is the legal document that effects the transfer. It must be completed by the transferor (the person selling or giving the shares) and include:

The consideration (price paid) – write “nil” for a gift
Full name and address of the transferor
Description of the shares (number, class, nominal value)
Company name and registration number
Full name and address of the transferee
Signature of the transferor (the transferee does not sign unless the articles require it)

Step 4: Pay Stamp Duty

Stamp duty is payable on share transfers where the consideration (price paid) exceeds £1,000. The rate is 0.5% of the consideration, rounded up to the nearest £5.

Consideration	Stamp Duty
£1,000 or less	Nil (exempt – no need to stamp)
£1,001 to £10,000	0.5% of consideration
Over £10,000	0.5% of consideration

For a share transfer worth £50,000, the stamp duty would be £250.

Stamp duty must be paid within 30 days of the transfer. The stock transfer form is sent to HMRC’s Stamp Office for stamping with the duty payment. Late payment attracts interest and penalties.

Exempt Transfers

No stamp duty is payable on:

Transfers where the consideration is £1,000 or less
Transfers as a gift with no consideration (declare this on the form)
Transfers to a charity
Transfers between associated companies (subject to group relief rules)
Transfers under a divorce order

For exempt transfers worth over £1,000 but with no consideration, the form should include a certificate of exemption.

Step 5: Board Approval

Present the completed stock transfer form to the board of directors for approval. If the articles require board consent, the directors must resolve to approve or reject the transfer.

The board resolution should record:

The details of the transfer (parties, number of shares, consideration)
That the board has approved the registration of the transfer
That a new share certificate should be issued to the transferee
That the old share certificate should be cancelled

Step 6: Update the Register of Members

Once the board approves the transfer, update the register of members to reflect the new ownership. The register must show:

The date the transferee became a member
The number and class of shares held
The date the transferor ceased to be a member (if they have transferred all their shares)

Issue a new share certificate to the transferee within 2 months of the transfer. The certificate must state:

The company’s name and registration number
The shareholder’s name
The number and class of shares
The amount paid up
A distinguishing number (if shares have serial numbers)

The certificate should be signed by a director and the company secretary (if the company has one), or by two directors.

The transferor’s original share certificate must be cancelled and either returned to them (stamped “cancelled”) or retained in the company’s records.

Step 9: Update the Confirmation Statement

The change in shareholding will be reflected in the company’s next confirmation statement filed with Companies House. There is no separate filing required for a share transfer, but the statement of capital must be accurate at the confirmation date.

Capital Gains Tax

The transferor may be liable to Capital Gains Tax (CGT) on any profit made on the disposal. The gain is calculated as:

Consideration received minus original cost minus allowable costs (legal fees, stamp duty on acquisition)

CGT is charged at:

Taxpayer Band	Rate on Share Disposals
Basic rate	10%
Higher/additional rate	20%

Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) may reduce the rate to 10% on the first £1 million of qualifying gains, if the shareholder holds at least 5% of the share capital and has held the shares for at least 2 years.

Inheritance Tax

Shares transferred as a gift may be a chargeable transfer for Inheritance Tax purposes. If the transferor dies within 7 years of the gift, the value of the shares may be included in their estate.

Business Property Relief may reduce the IHT value by 100% for shares in unlisted trading companies, provided certain conditions are met.

Income Tax on Undervalue Transfers

If shares are transferred to an employee at below market value, the discount is treated as employment income and subject to income tax and NIC. This is common in employee share schemes.

When a shareholder dies, their shares pass to the personal representatives (executors or administrators). The transfer process is:

Grant of probate (or letters of administration) is obtained
The personal representatives produce the grant to the company
The company registers the personal representatives as the holders
The personal representatives transfer the shares to the beneficiaries under the will or intestacy rules
A new share certificate is issued to the beneficiary

No stock transfer form is needed for the registration of personal representatives, but a form is needed for the subsequent transfer to beneficiaries.