Costs of buying and selling shares

Question 1

what is the charging structure when buying shares? Stamp duty or reserve tax

Answer 1

Stamp duty or Stamp duty reserve tax (SDRT) – the former is applicable to paper based transactions while the latter is for electronic transactions. Both are at the rate of 0.5% of the transaction, levied on the buyer. The difference between the two is that Stamp duty will be rounded to the nearest £5 while SDRT is paid to the
nearest penny. There is also a £1,000 threshold where no Stamp Duty is paid. There is no such threshold for SDRT. No stamp duty is payable on the purchase of AIM shares or shares in OEICs / units in Unit Trusts.
The calculation of SD and SDRT is often a question in the exam – they will give you an example of a paper transaction and an electronic transaction and ask you to
work out the total payable.

Question 2

what fees are applied with POTAM levy

Answer 2

on transactions over £10,000 there is a
£1 levy which is paid to the Panel of Takeovers and Mergers. This is the body that looks into the competitive impacts of mergers and takeovers on the consumer.