What shares trade without the tax?
When buying shares in the UK’s leading FTSE 100 index, most investors are familiar with the standard 0.5% Stamp Duty Reserve Tax (SDRT). However, a company’s legal domicile—not its stock market listing—determines the tax you pay, creating three distinct categories of stocks within the index.
Understanding this difference is key to knowing the true cost of your investment. While some companies are genuinely free of stamp duty, others, particularly those from Ireland, carry a tax rate that is double the UK standard. This guide provides the definitive breakdown.
Category 1: Truly Stamp Duty-Free (0% Tax)
These companies are incorporated in jurisdictions that do not charge stamp duty on share transfers for UK investors. As they are not UK-domiciled, they are also exempt from the 0.5% SDRT. Buying shares in these firms offers a genuine cost advantage.
- Swiss Domiciled Companies:
- Coca-Cola HBC (CCH)
- Glencore (GLEN)
- Spanish Domiciled Companies:
- International Airlines Group (IAG)
- Companies in Crown Dependencies (Jersey & Guernsey):
- Experian (EXPN) (Jersey)
- Pershing Square Holdings (PSH) (Guernsey)
- WPP (WPP) (Jersey)
Category 2: The Irish Exception (1% Tax)
Several major FTSE 100 companies are incorporated in Ireland. While this exempts them from the 0.5% UK SDRT, they are instead subject to 1% Irish Stamp Duty.
This higher tax is levied by the Irish government and is typically collected automatically by brokers. This means investors in these companies pay double the stamp duty rate of a standard UK-listed company.
- Irish Domiciled Companies (Subject to 1% Irish Stamp Duty):
- CRH (CRH)
- Flutter Entertainment (FLTR)
- Smurfit Kappa Group (SKG)
Category 3: The UK Standard (0.5% Tax)
The majority of companies in the FTSE 100 are incorporated in the United Kingdom. Any electronic purchase of their shares attracts the standard Stamp Duty Reserve Tax (SDRT) at a rate of 0.5%.
On the Horizon: A Stock to Watch
Investors should keep an eye on Ashtead Group (AHT). The equipment rental firm is currently UK-domiciled (0.5% stamp duty) but has discussed moving its primary listing to the US. Should this happen, its shares would likely become exempt from UK stamp duty, moving it into the 0% category.
The Investor Takeaway
To avoid surprises, always consider a company’s domicile before investing. The true cost of your transaction on a FTSE 100 stock will fall into one of three distinct bands: 0%, 0.5%, or 1%. Knowing which band a company falls into is a crucial part of making an informed investment decision.