Share Allotments & Transfers: What UK Small Businesses Need to Know

Issuing or transferring shares might sound like something only big corporations worry about, but it’s actually very common—and often vital—for small businesses too. Whether you’re bringing in a new partner, raising funds, or rewarding employees, it’s essential to get the process right.

This guide breaks down the key differences between share allotments and share transfers, when to use each, and what you need to file with Companies House.

What is a Share Allotment?

A share allotment is when a company issues new shares—effectively creating new ownership in the business. It’s a way of raising capital or giving someone a stake in the company. Unlike a transfer, these are brand-new shares that didn’t exist before.

When Would a Business Allot Shares?

1. To Raise Capital
   Instead of taking on debt, a business might issue new shares in exchange for investment.
   Example: A tech startup issues shares to raise £50,000 for development work.
2. To Bring in a New Partner or Director
   A new co-owner might receive shares to reflect their involvement.
   Example: A construction firm allots shares to a new partner with industry expertise.
3. As Part of an Employee Incentive Scheme
   Shares can be given to key employees as a motivational tool.
   Example: A marketing agency rewards a manager with shares for performance.
4. To Convert Debt into Equity
   If the company owes money, the creditor might accept shares instead of repayment.
   Example: A café converts a £10,000 loan from an investor into shares.

What Paperwork is Needed?

• Update the company’s share register
• File a Form SH01 with Companies House
• Issue share certificates to the new shareholder

What is a Share Transfer?

A share transfer happens when existing shares change hands—no new shares are created. The total number of shares stays the same, but the ownership changes.

Common Scenarios for Share Transfers

1. Sale of Shares
   A shareholder might sell their shares to someone else.
   Example: A company director sells 20% of their shares to an external investor.
2. Gifting Shares
   Shares can be gifted, often as part of succession or inheritance planning.
   Example: A parent gifts shares to their children through the business.
3. Employee Exit
   Departing staff who hold shares may need to transfer them.
   Example: A co-founder leaving a business sells their shares to the other directors.
4. Investor Buyout
   New investors may acquire shares from earlier backers.
   Example: A venture capital firm buys shares from a seed investor.

The Share Transfer Process

• Agree Terms: Buyer and seller agree on price and conditions.
• Complete a Stock Transfer Form (Form J30 in the UK)
• Pay Stamp Duty: 0.5% if the consideration is over £1,000
• Update the Share Register: Reflect the new owner
• Issue a New Share Certificate

Share Allotment vs Share Transfer: Key Differences

Feature	Share Allotment	Share Transfer
Creates new shares?	✅ Yes	❌ No
Purpose	Raise funds, bring in partners, etc.	Change ownership of existing shares
Form to file?	SH01 (Companies House)	Stock Transfer Form (J30)
Stamp Duty?	❌ Not usually	✅ 0.5% if over £1,000
Updates share register?	✅ Yes	✅ Yes

Helpbox Tips for Getting It Right

• Always keep your shareholder register up to date—HMRC and Companies House can fine you for incorrect filings.
• Timing matters: For tax planning (especially gifts or transfers), consider the date of the transaction.
• Speak to Helpbox before issuing or transferring shares. We’ll make sure it’s documented properly, filed correctly, and tax-efficient.

Share allotments and transfers may seem admin-heavy, but they’re powerful tools for growing your business, retaining talent, and planning for the future.

Whether you’re bringing in investment, exiting a co-founder, or passing the business on to family, getting the paperwork right can save you money—and stress—down the line.