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Stamp Duty
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When we say stamp duty we are probably referring to Stamp Duty Reserve Tax (SDRT).
This a duty levied by the Inland Revenue on purchases of shares. The difference between SDRT and stamp duty is that the duty is payable whether or not the transfer of shares physically takes place.
There are other instances where stamp duty is payable for example the transfer of shares by way of a gift. For the full list and rates of duty see http://www.inlandrevenue.gov.uk/so/
To make things slightly more interesting you might get involved in Irish Stamp Duty. This is chargeable, again to the purchaser, at a rate of 1%. However if physical transfer does not take place and the settlement dates of the purchase and sale are identical then the duty may be claimed back.
30th April 2008 UPDATE
The situation regarding Irish stamp duty has recently changed and can no longer be claimed back as we outlined previously.