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Make the most of company stock in your 401(k)

Key takeaways

Are you one of the 2+ million Fidelity customers who holds company stock in a 401(k) or other workplace retirement savings plan?

If so, you should know about a tax break that could save you a bundle—if you qualify.

Anyone who owns company stock will eventually have to decide how to distribute those assets—typically when you retire or change employers. Taking a distribution could leave you facing a big tax bill, but a little-known tax break—taking advantage of net unrealized appreciation (NUA)—has the potential to help.

"With appreciated company stock, you'll face the question of what kind of taxes—capital gains vs. ordinary income taxes—you will wind up paying on the gains of your company stock holdings over time," says Mitch Pomerance, vice president and financial consultant at Fidelity Investments.

"With NUA, when you have company stock in your qualified retirement plan, such as your 401(k), and take a lump-sum distribution from a qualified retirement plan, you can effectively pay lower capital gains rates on a portion of your tax-deferred assets instead of paying the typically higher ordinary income rates when assets are withdrawn from the tax-deferred account," explains Pomerance.

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What is NUA?

NUA is the difference between the price you initially paid for a stock (its cost basis) and its current market value. Say you can buy company stock in your plan for $20 per share, and you use $2,000 to purchase 100 shares. Five years later, the shares are worth $35 each, for a total value of $3,500: $2,000 of that figure would be your cost basis and $1,500 would be NUA.

Why should you care about NUA? When you want to distribute company stock or its cash value out of your 401(k), you will face a choice: Roll it into an IRA (or another 401(k) plan), or distribute the company stock into a taxable account and roll the remaining assets into an IRA or 401(k). The latter option might be more effective, depending on your circumstances, thanks to IRS rules governing NUA.

When you transfer most types of assets from a 401(k) plan to a taxable account, you pay income tax on their market value. But with company stock, you pay income tax only on the stock’s cost basis—not on the amount it gained since you bought it. (If you are under age 59½, you may also pay a 10% early withdrawal penalty.) Remember, upon direct, in-kind transfer to an IRA the special NUA tax advantages for company stock are lost. Note: There may also be an option available to leave the company stock assets in the 401(k), without any type of rollover or distribution.

When you sell your shares, you’ll pay long-term capital gains tax on the stock's NUA, along with any additional capital gains that occur after you make the distribution. The maximum federal capital gains tax rate is currently 20%, far lower than the current 37% top income tax rate, so your potential tax savings may be substantial. (Also note that when The Tax Cuts and Jobs Act of 2017 expires in 2026, the current top income rate is expected to reset to 39.6%.)

"In general, if the cost basis is low, relative to the size of the stock position in your 401(k), it may make sense to take the tax hit now, rather than later on the full amount," says Pomerance.

When to choose an NUA tax strategy

Consider the following 4 factors as you decide whether to roll all your assets into an IRA or to transfer company stock separately into a taxable account:

Tax rates. The larger the difference between the ordinary income tax rate and the long-term capital gains tax rate, the greater the potential tax savings of electing an NUA tax treatment of company stock.

Absolute NUA. The larger the dollar value of the stock's appreciation, the more the NUA rule can save you on taxes.

Percentage of NUA. An NUA that is a higher percentage of total market value creates greater potential tax savings because more of the proceeds will be taxed at the lower capital gains rate and less will be taxed at income tax rates.

Time horizon to distribution. The longer you plan to keep your assets invested in an IRA or taxable account before liquidating them, the greater the potential benefit of tax-deferred growth, and therefore, the less you would benefit from NUA. A shorter time frame, on the other hand, makes the NUA election more attractive.

How NUA stock is generally taxed

2 scenarios: when does nua make sense.

Let's look at 2 hypothetical NUA scenarios. Both workers had long careers and contributed to their company's qualified retirement plan for many years. Both are faced with sizable tax bills on their account balances.

Scenario 1: Utilize NUA and buy down the basis now to save on taxes in retirement

Here's a hypothetical scenario where NUA makes sense. After a 40-year career in the defense industry, Tony, age 67, recently retired with $2 million in his 401(k). He is widowed and currently in the 24% federal tax bracket. About half of Tony's $2 million nest egg is company stock worth approximately $1 million. Because he participated in the company's plan for many years and purchased the stock at low share prices over time (the average basis vs. the current share price), the actual cost basis of his company stock is only $50,000.

While still working earlier this year, Tony, whose recent annual salary was $100,000, made a $40,000 after-tax contribution to his 401(k) to buy down the basis of his company stock. Under his company's retirement plan rules, he is allowed to use this money to reduce the baseline value on which taxes will be based, allowing his taxable income to stay in the 24% federal tax bracket. If he has made after-tax contributions, that tax basis will automatically ascribe to anything he doesn't directly roll over when he takes the full payout, including the stock.

When Tony's required minimum distributions (RMDs) start in a few years, he's projected to be in the 22% federal tax bracket. To take advantage of NUA, after he retired this year, he requested a full distribution of his 401(k) account, sending the company stock in-kind to a taxable brokerage account, and directly rolling over the rest to an IRA. Now, he'll only pay tax at the ordinary income rate on $10,000 worth of the basis on the company stock, and he won’t be taxed on the gain on the company stock, valued at $1 million, until he sells it. The other $1 million or so stays in the IRA to pay for future retirement expenses or to give away to charities and family.

Down the road when Tony passes away, if he hasn't yet sold the company stock, his children can receive a step-up in basis on any gain since Tony transferred the employer stock into his taxable account; however, the remaining portion of the NUA is considered "income in respect of a decedent" and is still taxable as a long-term capital gain when eventually sold by Tony’s kids. Additionally, Tony's estate may be subject to estate tax in the year he passes, and the children may be subject to inheritance tax, if applicable for their state, when they inherit the company stock.

"Like a Roth conversion, NUAs should be realized primarily because you want to pay a lower tax rate on assets in the future by paying some taxes in the present," explains Pomerance. “You also are able to potentially reduce future RMDs by getting the assets out of the retirement plan accounts.”

Scenario 2: Don't utilize an NUA approach because taxes are estimated to be lower in the future

In some scenarios, however, income in retirement may be much lower than the current level and the effective ordinary income tax rate may be lower, so the investor may be better off not doing an NUA but by simply rolling the company stock directly into an IRA.

In the following hypothetical scenario, consider Irwin, age 65. He's had a long career in biotech as a senior executive and earns about $500,000 a year, putting him in the estimated federal tax bracket of 35%.

He just retired from one company with $2,500,000 in his 401(k) plan, of which $500,000 was invested in company stock. NUA is $250,000. Although that's a nice nest egg, Irwin is at the peak of his earnings capacity, loves what he does, and will almost certainly continue working for another 5 years after he leaves his current position and company this year.

Looking a few years down the road, Irwin would retire at age 70 and would have estimated RMDs of approximately $162,000 at age 73. That should put him in the 22% federal tax bracket vs. his current tax bracket of 35%.

In Irwin's case, if he exercised NUA, it would put him in a 37% bracket today and further increase the taxes to be paid on NUA. So NUA doesn't make sense, given his high level of current income, along with the anticipation that his tax bracket will likely be lower in the future.

Is NUA right for me?

It generally makes sense to utilize NUA when you believe your current tax rate is the same or lower than what you expect it to be in the future. Consider the following 3 conditions, which may indicate that your income will not fall sharply in the future and may even rise:

If yes is answered to all 3 conditions, an NUA may be to your advantage, although it’s no guarantee, so be sure to consult with a tax or financial planning professional regarding your personal situation before making any decisions.

"In general, it's important to work out the various tax scenarios because you'll eventually have to pay taxes on gains from selling company stock," says Pomerance. "However, you don't want to let taxes dictate investing decisions. Working with your Fidelity financial professional or on your own, make sure to first consider the sale of NUAs in light of your asset allocation, cash flow needs, and long-term retirement goals—then consult your tax professional to make the determination if this tax strategy makes sense for you."

How to qualify for NUA tax treatment

You must meet all 4 of the following criteria to take advantage of the NUA rules:

"The IRS enforces these rules strictly," says Pomerance. "If you do not meet one of the criteria—for example, if you fail to distribute all assets within one tax year—your NUA election will be disqualified, and you would owe ordinary income taxes and any penalty on the entire amount of the company stock distribution."

Tip: For more information on these complex rules, as well as situations that trigger additional tax restrictions, review IRS Publication 575, Pension and Annuity Income.

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How to Transfer Shares of Stock to Another Person

Transferring stock to a loved one is done through a stock transfer agent.

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More Articles

•   1. How to Transfer Stock Ownership
•   2. How Much to Transfer Stocks to My Kids?
•   3. What Happens to the Cost Basis When Moving Stocks to a Trust Account?

Transferring stock to another person is easy. Most companies provide a link with stock transfer instructions on their websites or direct you to a stock transfer agent who handles stock transfers for the company. There are no tax implications for the recipient when the shares are transferred, but you may face a gift tax if the value of the stock transfer exceeds a certain amount.

You can use a stock registry agent and stock transfer form in order to officially transfer shares of stock to another individual.

Understanding Stock Transfers

When you purchase a stock, you receive what's called a stock certificate, which is a legal document proving your ownership of the shares. If you decide to transfer your shares to someone else, you'll have to perform a stock transfer using a stock transfer form. You can obtain the form by visiting the website of the stock registry agent or contacting the agent by phone.

First Steps For Completing the Transfer

Print the "Stock Transfer Form," fill it out in its entirety, and endorse the stock certificates. You'll also have to obtain a medallion guarantee from an approved financial institution. Once you're satisfied that you filled everything out correctly, mail the stock transfer form and the stock certificates to the agent.

Understanding the Gift Tax

Every year the Internal Revenue Service publishes an amount, referred to as the annual exclusion limit, that you're allowed to give to another person without having to fill out a gift-tax return. In the years, 2013 through 2017, the amount was steady at $14,000. However, for 2018, the annual gift tax exclusion limit has been raised to $15,000. If the value of your stock transfer is above the annual limit, you'll have to file a gift-tax return using IRS Form 709. Ordinarily, the gift tax can be as high as 40 percent, but most taxpayers don't pay a gift tax because of the unified credit, which applies to both the gift and estate taxes.

In 2018, the unified credit for individuals is $11.18 million – a figure which more than doubled from the previous year with recent 2017 tax reforms – that applies to every taxpayer over his lifetime. This means you can apply the excess of the value of the stock transfer against the unified credit and not have to pay a gift tax although you'll still have to file a gift-tax return.

Tax Impact to Recipient

It is worth noting, the Tax Cuts and Jobs Act of 2017 made sweeping tax reforms. One of the many changes for years 2018 through 2025, is the way long-term and short term capital gains are taxed. Prior to the Act, long-term capital gains taxes were tied to ordinary federal income tax rates. Now, long-term capital gains have their own tax brackets ranging from a 0 percent bracket for $0 to $38,601 in qualifying dividends or long-term capital gains, to a 20 percent bracket for gains of $425,801 and higher. Although you avoid the gift tax, the recipient will have to pay a capital gains tax if she makes a profit off the shares. In general, the IRS uses your cost basis to establish cost basis for the recipient if she sells the shares for a gain.

For instance, if she sells the shares within one year of receiving them, she pays a short-term capital gains tax, which could be as high as 37 percent. Because short-term capital gains are taxed at ordinary income tax rates, this can range from 10 percent to 37 percent under new reforms. If she sells the shares past one year, she pays the long-term capital gains tax of 20 percent or lower, depending on her income bracket. However, if she has a modified adjusted gross income higher than $200,000 as an individual, she could find herself subject to the additional net investment income tax, or NIIT, of 3.8 percent.

If your cost basis fell at the time of the transfer and the recipient sells the shares for less than that, the IRS uses the cost basis at the time of the transfer to calculate her capital loss.

• Securities and Exchange Commission: Transfer Agents
• IRS: What's New - Estate and Gift Tax
• IRS: Forms and Publications - Estate and Gift Tax
• MarketWatch: Your simple guide to the new capital gains tax rates
• IRS: Questions and Answers on the Net Investment Income Tax

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How to transfer stock ownership, how much to transfer stocks to my kids, what happens to the cost basis when moving stocks to a trust account, tax implications of giving stock to children for college, how to transfer stocks as a gift, irs rules for taxes on long-term capital gains, are inherited stocks long-term or short-term capital gains, definition of "disposition of shares", how to fill out a stock transfer statement, british inheritance tax rate & procedures, do i have to pay taxes on money my parent gave me, does selling your shares of stock mess up your taxes.

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Stock Transfer Agreement

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What is a stock transfer agreement.

A stock transfer agreement is a legal document between shareholders and another party that provides the right to sell or transfer shares of stock at a predetermined price.

A stock transfer agreement can be used when there are more than two parties involved in the sale of stocks, or for any time there is a need to specify which party has what rights if they are not already specified by law. The most common use for this type of agreement is when one company buys another company's assets. This ensures that all shareholders know which entity will have control over their shares after the transaction takes place. It also helps ensure that each shareholder will receive fair compensation based on how many shares they own, and protects against certain types of lawsuits from being filed against either side in the future.

Common Sections in Stock Transfer Agreements

Below is a list of common sections included in Stock Transfer Agreements. These sections are linked to the below sample agreement for you to explore.

Stock Transfer Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.0 2 dex100.htm STOCK TRANSFER AGREEMENT , Viewed September 27, 2021, View Source on SEC .

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I am a licensed and active NY and CT Contracts Attorney, with over 20 years of diverse legal and business experience. I specialize in reviewing, drafting and negotiating commercial agreements. My practice focuses on working with small business clients as well as clients from international brokerage firms on acquisitions, especially in the Ecommerce space; drafting, negotiating, reviewing and advising on business agreements; ; breach of contract issues, contract disputes and arbitration. I am licensed to practice in New York and Connecticut, and am a FINRA and NCDS Arbitrator. My experience includes serving as General Counsel to small businesses. This entails reviewing, updating and drafting contracts such as employments agreements, asset purchase agreements, master services agreements, operating agreements and a variety of business and commercial contracts. Additionally, I assist clients with business strategies, contract disputes and arbitration. My diverse experience allows me to give my clients a well-rounded approach to the issues they face. I have been at top AML law firms; a Vice President at an Investment Bank, a Civil Court Arbitrator presiding over cases in contract law, commercial law, a Hearing Officer, presiding over cases and rendering written decisions, and a Judicial Clerk to a Civil Court Judge. It would be a privilege to assist you and your business with my services.

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I grew up in Beaumont, Texas. I attended Baylor University for college and the The University of Texas School of Law for law school. I gained extensive experience in many areas of transactional law through my former position as corporate counsel at National Western Life Insurance Company and my current position as an Associate at Nance & Simpson, LLP.

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Assignment of Stock - Free Legal Form

Check our free sample assignment of stock legal form. 1 min read updated on February 01, 2023

Assignment of Stock Form

For good and valuable consideration, receipt of which is hereby acknowledged, I, [Name] the undersigned, residing at [Address] hereby sell, assign and transfer to [Name], residing at [Address], [Number] shares of the stock of [Name of Corporation] (the "Corporation") standing in my name on the books of the Corporation, represented by Certificate No. [Certificate Number], and hereby irrevocably constitute and appoint [Name], attorney-in-fact to transfer the stock on the books of the within named Corporation, with full power of substitution in the premises.

Dated: [Month, Day, Year] In the presence of: ________________________ Signature of Witness ________________________ Signature

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Sample Stock Transfer Ledger

Many times, clients will contact us and inform us that additional shareholders will be issued a certain number of authorized shares .  While this is important information, the Delaware Secretary of State does not require this information and neither does the Registered Agent. The old school way that clients keep track of their corporation’s issued shares is within a Stock Transfer Ledger and sometimes, stock certificates are issued.

What Is a Stock Ledger?

The Stock Ledger is a record-keeping document maintained by a corporation to track and manage stock ownership information. This can help your company keep a record of shareholders and their ownership interests. Neither the State of Delaware, nor your registered agent requires this information or keeps the ledger on file.  The Stock Transfer Ledger is for your company’s internal records only.

In the Stock Transfer Ledger, the names of the shareholders can be listed along with important information such as their places of residence, the time that they gained ownership within the corporation, the number of shares issued, the amount paid for the shares, and the stock certificate number that was distributed (if stock certificates were issued to the shareholder internally). If a corporation has multiple classes of stock (such as common stock and preferred stock ), the stock ledger may also specify the class of shares held by each shareholder. You can also keep track of transferred shares, to whom the shares were transferred, on which date, as well as the value of the stock transfer.

For reference, here is a free Stock Transfer Ledger template .

Delaware also allows for corporations to keep their corporate records internally using digital ledger technology or blockchain technology.  In other words, corporate transactions can be recorded digitally worldwide. As blockchain becomes more prevalent, you will see more companies move to blockchain technology to maintain their corporate records.

It’s critically important to maintain an accurate stock transfer ledger to ensure that there are no errors in ownership and so that the company does not violate corporate law.   With StockTreasury, records would be immutable.

Our most popular formation package is the Standard Delaware Formation Package that includes a physical corporate kit that ships to your address. The kit contains the Stock Transfer Ledger and other items such as: a physical seal embosser, a Delaware Company Guidebook, a Meeting Minute Book,  customizable bylaws , organizational resolutions and ten numbered stock certificates that feature the company name. If you formed your Delaware company and did not order a  Corporate Kit , but change your mind, let us know. We are happy to help you.

As your company brings on more investors, you may need more authorized shares. If this is the case, again we are happy to help. We can prepare and file a Stock Amendment with the Delaware Secretary of State for approval.  It takes about 3 to 5 business days for the Delaware Secretary of State to approve the Amendment with our service.  Our filings team will prepare the Stock Amendment and email the document for review and your electronic signature.  Once signed, we will file the Amendment with the state for approval.

If you have any questions, I can be reached at 1-302-645-7400 ext. 6144 or via email at  [email protected] .

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

There are 2 comments left for Sample Stock Transfer Ledger

What to do in case of lost Stock Transfer Book?

If you don't have records of the past stock transfers, you may want to work with an attorney on creating a new ledger with correct and accurate information. You may also be interested in a new product we offer - Stock Treasury - which allows you maintain your stock records digitally and securely:  https://www.delawareinc.com/ourservices/stocktreasury/  

Do you have a sample stock certificate on your website?

Yes, you can download a stock certificate template in our Download Center:  https://www.delawareinc.com/resources/download-center/

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Completing a stock transfer form

Find out how to complete a stock transfer form and get it processed.

You must complete a stock transfer form if you’re transfering shares you own to another person or company.

HMRC do not issue stock transfer forms, but you can get a stock transfer form from people such as a:

• broker or company registrar
• lawyer or an accountant who deals with share transfers

You can also download a stock transfer form from the internet.

When you have completed the form this must be sent to HMRC to be stamped. You must:

• send your stock transfer form to HMRC within 30 days of it being signed and dated
• pay the Stamp Duty within 30 days of the stock transfer form being signed and dated

New Stamp Duty processes were introduced on 25 March 2020. Where Stamp Duty is paid on a stock transfer form since then, that instrument is duly stamped for all purposes. The previous physical stamping system has been permanently withdrawn.

Completing the form

When you complete a stock transfer form you need to give all the details of the sale including the:

• shares being transferred (the quantity, class and type, for example 100 ordinary shares, ABC Limited)
• buyers name(s) and address
• sellers name(s) and address of registered holder(s)

You also need to give the value in pounds sterling of what you paid for the shares in:

• cash ― including bank transfers or cheques
• other stock and shares
• debt assumed or released

This is known as the chargeable consideration.

Enter ‘Nil’ as the consideration if you do not give any consideration for the shares.

Consideration in cash

If you give consideration in cash for the shares, you must include the amount. Any amounts in overseas currencies must be converted to pounds sterling using the exchange rate, either:

• on the date of the transfer
• agreed between the buyer and seller

The exchange rate used should be stated on the form.

You can find daily exchange rates on the Bank of England website .

Consideration in other stocks, shares and debt

If you give consideration other than in money for the shares, state what you have given. For example, 100 ordinary shares in XYZ Limited with a value of £70,000, or debt assumed of £70,000.

If the consideration is calculated by reference to something in another document, such as a Share Purchase Agreement, then state that. For example, ‘as calculated in Section 3 of the Share Purchase Agreement’. You must include a copy of the agreement.

Consideration ― special rules

Sometimes the chargeable consideration is different from the actual consideration given, for example due to a market value rule. In this case, we recommend you either:

• include details on the stock transfer form ― for example after the actual consideration state “Stamp Duty calculated on the £200,000 market value of the transferred shares”
• reference the deemed consideration on which Stamp Duty has been calculated in your covering letter

Certificate 1 and 2

If the transfer is exempt from Stamp Duty , or no chargeable consideration is given for the transfer, you need to complete one of the certificates on the back of the stock transfer form.

Certificate 1

You should complete certificate 1 if the:

• consideration you give for the shares is £1,000 or less
• transfer does not form part of a larger transaction or series of transactions where the total is more than £1,000

Certificate 2

You should complete certificate 2 if the:

• transfer is exempt from Stamp Duty, for example, transfers in connection with divorce or the dissolution of a civil partnership
• consideration given is not chargeable consideration

No certificate needed

You do not need to fill in either certificate 1 or 2 where no consideration is given for the shares or if you’re claiming a relief from Stamp Duty.

If you’re claiming a relief you’ll need to send the completed stock transfer form, together with details of the relief you’re claiming to HMRC for them to consider the relief claim.

If you’ve completed certificate 1 or 2, or no consideration was given for the shares, you will not usually have to pay any Stamp Duty or send your form to HMRC for stamping.

How to get your form stamped

Following the introduction of new Stamp Duty processes on 25 March 2020 you should not post your form to HMRC.

You can choose email to submit your Stamp Duty notification documents to us. You should be aware and accept that there are risks in using email, including:

• emails sent over the internet or other insecure network may be intercepted
• an unencrypted email can be intercepted, read and altered
• where it cannot be guaranteed that an unencrypted email received over an insecure network has not been altered
• phishing, impersonation and malware could contain malicious code
• an email sent over the internet may never arrive, and neither the sender or recipient may be aware of this.

You can find more general information on our data protection and policy procedures in the HMRC Privacy Notice .

The form must be fully completed, signed and dated (use power of attorney if necessary). We will accept e-signatures.

You must also include electronic versions of any Share Purchase Agreement and supporting documents if the Stamp Duty is calculated by reference to them.

If the consideration is something other than cash, a cash value must be provided.

If you received a Stamp Duty opinion from HMRC before the transaction, you must include a copy of this.

Email a copy of your stock transfer form or other instrument of transfer (for example, a scanned PDF) to [email protected] .

If you submit multiple stock transfer forms together, along with a single payment of Stamp Duty, a schedule should be provided allocating the Stamp Duty across the instruments.

You can also email an electronic version of form SH03 to notify us of the purchase of own shares by a company at [email protected] .

If you cannot submit your notification electronically

You may post your notification to:

BT- Stamp Duty HM Revenue and Customs BX9 2AS United Kingdom

Couriers should use a different address . You must not post original copies of documents to these addresses, as we will not retain or return them to you.

You must include your contact details when submitting by post.

The Stamp Duty must be paid before we can process the stock transfer form.

If you submit your notification without paying the Stamp Duty, we will contact you before we progress your notification.

After we get your notification

We cannot acknowledge each individual notification.

We aim to deal with 80% of stock transfer forms within 15 working days of receiving them.

We’ll contact you when we need more information or a document is missing or incorrect before we progress your submission.

You should allow 20 working days to give us time to deal with your form.

Get an opinion on the amount due

When you submit your Stamp Duty notification you must pay the correct amount of Stamp Duty , this may include penalties and interest payments.

If you’re not sure of the amount to pay you can ask us for an opinion on the amount due in your email.

Errors that cause delays

We may reject your application where some of the following apply:

• stock transfer form is not dated
• stock transfer form is not signed
• Stamp Duty is not rounded up to the nearest £5 on each document
• consideration value is not shown on the form ― if shares are given as consideration you’ll need to give the value of the shares
• no copy of the share purchase agreement is provided where the consideration is calculated by reference to it
• no schedule is provided when multiple stock transfer forms are submitted together

What happens next

What hmrc will do.

Check your form

Confirm we have received payment

Send you a letter that will:

• confirm receipt of Stamp Duty
• detail the transactions we are confirming receipt for and the verification codes
• confirm that the stock transfer form or instrument of transfer has been duly stamped by us so that the registrar may register the new ownership of the shares

What you must do

You must send it to the registrar of the company you have bought shares in with the stock transfer form and share certificate. The address of the registrar is on the share certificate.

The registrar will issue you with your own share certificate.

If you’re submitting a form SH03 to Companies House, you should include a copy of the HMRC confirmation letter with the SH03.

Same day stamping service

The ‘same day’ stamping service is a faster stamping service offered by HMRC. However, it’s only available in exceptional circumstances, such as unexpected or unforeseen circumstances when it’s essential to have a document stamped immediately.

You cannot use the ‘same day’ service if the urgency could have been avoided by:

• either party
• their respective agents

You will not be able to use the ‘same day’ stamping service if the law requires you to apply to us for a decision known as adjudication before stamping, such as when a relief is being claimed.

We expect the number of occasions when ‘same day’ stamping service is required to be minimal.

If you become aware that a transaction may need a stock transfer form stamped at short notice, you should email: [email protected] giving as much detail as possible, including the:

• number of stock transfer forms to be stamped
• specific reason or reasons for the request
• amount of Stamp Duty

You can also contact us to discuss your request.

Reliefs and exemptions

There are some share transactions that qualify for reliefs or exemptions . They can reduce the amount of Stamp Duty you pay or are exempt from Stamp Duty altogether.

If you pay too much Stamp Duty on a transaction you may be able to claim a refund.

Refunds must be claimed within 2 years of the date of the stamped document. If the document is undated, a refund can be claimed within 2 years of first execution.

Email your request to: [email protected] saying why you think a refund is due and provide the:

• stamped document
• HMRC confirmation letter where the document was stamped on or after 25 March 2020
• names of the parties involved

If you cannot email your refund request, you may post it to the same address mentioned under the section about ‘if you cannot submit your notification electronically’.

HMRC will contact you if they need more information to support your claim.

If your refund is agreed, the Stamp Duty will be repaid, usually with interest, from the date the tax was paid.

Electronic refunds

We can only repay Stamp Duty by electronic transfer.

Do not email your bank details with your refund claim, we cannot use them for security reasons.

HMRC will contact you by email and send you a secure Dropbox link so you can provide your bank account details. This link can only be accessed by you and designated HMRC officers. If you are unable to use Dropbox you should let us know.

Once your bank account details have been received, your repayment will be processed electronically.

CHAPS refunds

If the refund you’re applying for is £150,000 or more you can ask for payment by CHAPS electronic transfer.

UK shares bought from abroad

If you buy shares in a UK company while you’re abroad, you still have to pay Stamp Duty, and get the transfer documents stamped. If you do not do this within the time limits you may have to pay a penalty and interest.

Find out about deadlines and penalties in Stamp Duty: penalties, appeals and interest .

If you buy foreign shares you do not have to pay Stamp Duty. If however you bring a document which transfers shares into the UK there could be a charge to Stamp Duty. You may also have to pay other taxes on foreign income .

Get more information

If you need any help with working out if you have to pay Stamp Duty contact HMRC Stamp Taxes Helpline .

We have updated the background section to include information on where you can get your stock transfer form, when this must be returned to HMRC and Stamp Duty paid. Also, we've added more information about consideration in the section ‘Completing the form’ and in the section about 'How to get your form stamped' we've provided more detail about errors that cause delays.

We have updated the post code for postal submissions and enquiries for Stamp Duty.

If a consideration is calculated by reference to another document, you should state that when you complete a stock transfer form.

Stock transfer forms stamped under the new Stamp Duty procedures are confirmed to be ‘duly stamped’. Information about the risks of using email and an alternative postal address for notifications has been added.

Stamp Duty refunds can only be issued by electronic transfer while the coronavirus measures are in place. Information added on the process for providing your bank account details.

Temporary measures have been put in place to stop the spread of coronavirus (COVID-19), you must now email your stock transfer form to HMRC.

First published.

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The Best Energy Stock to Invest $1,000 in Right Now

T he news over the past year or so has sparked more than its share of discussion about the uncertainties in the economy, especially as it relates to geopolitical tensions across the globe. These tensions and uncertainties have economists worried that inflation will remain elevated. It also has some wondering if the U.S. can navigate a soft landing from the economic fallout caused by the pandemic.

Given this uncertain economic environment, one strong investment option to consider is midstream energy specialist Energy Transfer (NYSE: ET) . If you have $1,000 available to invest , now might be a great time to put it toward stock in Energy Transfer. Here's why.

High yield and growing distribution

One of the first things that attracts investors to Energy Transfer is its attractive 8% yield. That yield gives investors $80 in distribution income annually for every $1,000 they invest. As an added bonus, since Energy Transfer is structured as a master limited partnership (MLP) most of that distribution income is tax deferred until the investment is sold. While owning MLPs requires that investors fill out special tax forms called K-1s , they are generally easy to manage if you use a tax preparation program such as Intuit 's TurboTax.

Despite its high yield, Energy Transfer's distribution is well covered. For 2023, the company paid out cash distributions of about $4 billion, while its distributable cash flow (DCF) was $7.6 billion. DCF is the company's operating cash flow minus its maintenance capital expenditures (capex) . That was good for a robust 1.9x coverage ratio in 2023 and left it with $3.6 billion in excess cash flow after distributions. It spent $1.6 billion in growth capex last year, so it had $2 billion left to pay down debt and buy back shares.

This is important because it helps speak to the safety of the company's distribution as well as its ability to grow the distribution.

The other important aspect to look at concerning distribution safety is leverage. Energy Transfer said it ended 2023 with leverage toward the lower end of its 4x to 4.5x target range when taking into consideration adjustments for acquisitions. A few years ago the company had to cut its distribution in half due to its high leverage, but it has since restored the distribution rate to where it was after getting its leverage to a more sustainable level.

Right now, Energy Transfer's distribution looks to be in good shape and set to grow to new heights. After quickly raising it back to where it was before the cut, Energy Transfer will look to raise its payout by 3% to 5% a year moving forward.

Vital to U.S. energy security and an AI beneficiary

Another important aspect of Energy Transfer is that, as one of the largest midstream operators in the country, the company plays a critical role in U.S. energy infrastructure. Its large integrated system touches on nearly every aspect of the midstream value chain, transporting and storing everything from crude oil and natural gas to NGLs (natural gas liquids) and refined products, such as gasoline.

During uncertain times, commodity prices such as oil and natural gas can be quite volatile. However, Energy Transfer has very little direct commodity exposure, instead operating a very fixed-fee business more impacted by commodity volumes, which are also often protected through minimum volume commitments. At the same time, Energy Transfer has the assets to take advantage of commodity price swings and volatility by selling them into different U.S. or international markets, upgrading products, or storing them for later use.

The company has built and acquired an integrated system that cannot be replicated and is vital to U.S. energy security. At the same time, it has solid growth prospects. The company has a robust growth project backlog, and should also benefit from the continued increase in global energy consumption.

With nearly 90,000 miles of natural gas pipelines, Energy Transfer will also be positively impacted by the increased power that is needed to run artificial intelligence (AI)-powered applications. Why? Because artificial intelligence and machine learning models consume huge amounts of power, and that power will largely be supplied by natural gas.

A great time to buy Energy Transfer

Now is a great time to buy Energy Transfer. It has a well-covered, robust distribution yield, and a big potential opportunity in front of it with growing power demand coming from the use of AI. This gives investors a unique combination of safety, yield, and a strong potential growth outlook.

So if you have $1,000 sitting in a savings account, this pipeline stock is a strong option that will give you both additional income as well as solid price appreciation potential.

Should you invest $1,000 in Energy Transfer right now?

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Geoffrey Seiler has positions in Energy Transfer. The Motley Fool has positions in and recommends Intuit. The Motley Fool has a disclosure policy .

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Assignment: Definition in Finance, How It Works, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

What Is an Assignment?

Assignment most often refers to one of two definitions in the financial world:

• The transfer of an individual's rights or property to another person or business. This concept exists in a variety of business transactions and is often spelled out contractually.
• In trading, assignment occurs when an option contract is exercised. The owner of the contract exercises the contract and assigns the option writer to an obligation to complete the requirements of the contract.

Key Takeaways

• Assignment is a transfer of rights or property from one party to another.
• Options assignments occur when option buyers exercise their rights to a position in a security.
• Other examples of assignments can be found in wages, mortgages, and leases.

Uses For Assignments

Assignment refers to the transfer of some or all property rights and obligations associated with an asset, property, contract, or other asset of value. to another entity through a written agreement.

Assignment rights happen every day in many different situations. A payee, like a utility or a merchant, assigns the right to collect payment from a written check to a bank. A merchant can assign the funds from a line of credit to a manufacturing third party that makes a product that the merchant will eventually sell. A trademark owner can transfer, sell, or give another person interest in the trademark or logo. A homeowner who sells their house assigns the deed to the new buyer.

To be effective, an assignment must involve parties with legal capacity, consideration, consent, and legality of the object.

A wage assignment is a forced payment of an obligation by automatic withholding from an employee’s pay. Courts issue wage assignments for people late with child or spousal support, taxes, loans, or other obligations. Money is automatically subtracted from a worker's paycheck without consent if they have a history of nonpayment. For example, a person delinquent on $100 monthly loan payments has a wage assignment deducting the money from their paycheck and sent to the lender. Wage assignments are helpful in paying back long-term debts.

Another instance can be found in a mortgage assignment. This is where a mortgage deed gives a lender interest in a mortgaged property in return for payments received. Lenders often sell mortgages to third parties, such as other lenders. A mortgage assignment document clarifies the assignment of contract and instructs the borrower in making future mortgage payments, and potentially modifies the mortgage terms.

A final example involves a lease assignment. This benefits a relocating tenant wanting to end a lease early or a landlord looking for rent payments to pay creditors. Once the new tenant signs the lease, taking over responsibility for rent payments and other obligations, the previous tenant is released from those responsibilities. In a separate lease assignment, a landlord agrees to pay a creditor through an assignment of rent due under rental property leases. The agreement is used to pay a mortgage lender if the landlord defaults on the loan or files for bankruptcy . Any rental income would then be paid directly to the lender.

Options Assignment

Options can be assigned when a buyer decides to exercise their right to buy (or sell) stock at a particular strike price . The corresponding seller of the option is not determined when a buyer opens an option trade, but only at the time that an option holder decides to exercise their right to buy stock. So an option seller with open positions is matched with the exercising buyer via automated lottery. The randomly selected seller is then assigned to fulfill the buyer's rights. This is known as an option assignment.

Once assigned, the writer (seller) of the option will have the obligation to sell (if a call option ) or buy (if a put option ) the designated number of shares of stock at the agreed-upon price (the strike price). For instance, if the writer sold calls they would be obligated to sell the stock, and the process is often referred to as having the stock called away . For puts, the buyer of the option sells stock (puts stock shares) to the writer in the form of a short-sold position.

Suppose a trader owns 100 call options on company ABC's stock with a strike price of $10 per share. The stock is now trading at $30 and ABC is due to pay a dividend shortly. As a result, the trader exercises the options early and receives 10,000 shares of ABC paid at $10. At the same time, the other side of the long call (the short call) is assigned the contract and must deliver the shares to the long.

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Echo Wang is a correspondent at Reuters covering U.S. equity capital markets, and the intersection of Chinese business in the U.S, breaking news from U.S. crackdown on TikTok and Grindr, to restrictions Chinese companies face in listing in New York. She was the Reuters' Reporter of the Year in 2020.

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Thoma Bravo to buy UK's Darktrace for about $5.32 billion

Private equity firm Thoma Bravo has agreed to buy British cybersecurity firm Darktrace for about $5.32 billion in cash, the companies said on Friday.