Scrap share tax, says Abrdn boss: investors DO support the UK market

Abolishing stamp duty on shares would boost the economy and encourage companies to invest in growth, one of the city’s most influential figures said this weekend.

Sir Douglas Flint, chairman of fund manager Abrdn and former chairman of HSBC, backed the Mail’s campaign to scrap the tax, which imposes a 0.5 percent levy on share purchases.

Research shows that investors are keen to put their money in British shares. Their enthusiasm might increase if the duty were removed.

More than 12 million savers – almost a quarter of the adult population – say they are likely to buy shares in NatWest, according to a survey by Abrdn.

The sale of the government’s stake in the bank has been suspended due to the elections.

More than a third said they would choose the UK market to invest £1,000 for the long term, ahead of any other market.

The London market has recently come under scrutiny after major companies such as microchip designer Arm and gambling giant Flutter preferred to list in New York over the City.

Flint said removing stamp duty on shares would motivate people to invest in UK shares.

“Savers pay for it,” he told The Mail on Sunday. “It’s grit in the machine and not a good idea if you’re trying to encourage a culture of stock ownership,” he added.

He cited recent research showing that abolishing stamp duty would provide a major boost to pensions, savings and investments – at little or no overall cost to taxpayers. The Center for Policy Studies (CPS) found that a typical pension pot would be £6,000 larger if share tax was abolished.

It would also increase long-term economic growth by up to 0.7 percent, while increasing business investment by £6.8 billion, the think tank found.

That compares with the £3.2 billion that stamp duty is expected to raise this year.

Taxes are higher in Britain than in any other major financial centre, and some countries do not impose them at all. The CPS called it ‘a tax on growth’.

“There are three reasons to abolish stamp duty on shares,” Flint said.

‘Firstly, these are costs that arise from people’s accumulated savings.

‘Secondly, it discourages investment in British companies. Third, liquidity is good for the markets, but if you put a barrier in the form of fees every time you trade, you limit it.”

The Tories have promised not to increase stamp duty, but Labor has refused to rule it out.

Last week, the Investment Association joined a growing chorus calling on the new government to abolish the tax.

Chris Cummins, chief executive of the IA, said the move was an “obvious” way to increase the attractiveness of UK shares.

And in an interview with The Mail on Sunday, London Stock Exchange boss Julia Hoggett vowed she would “fight for everything” to attract and retain companies to Britain. Listings in London are improving, she said.

“We’re definitely seeing the pipeline starting to build and (it’s) cause for optimism.”