Abolishing ‘pernicious’ share-buying tax could revive Britain’s flailing stock market
- Investors pay 0.5% stamp duty on the price of the London-listed shares they buy
- The tax will raise £3.2 billion this year and £23.7 billion between now and 2028-29
- Other countries charge a lower tax or no tax on share purchases
Abolishing the ‘pernicious’ tax on share purchases would help revive Britain’s flagging stock market, according to leading figures in the City.
Investors currently pay 0.5 percent stamp duty on the price of London-listed shares they buy – or £5 for every £1,000 invested in a UK company.
The tax is expected to raise £3.2 billion this year and £23.7 billion between now and 2028-29, analysis of budget documents shows.
With many other countries imposing a much lower tax or no tax on stock purchases, critics argue that London’s stock market is at a disadvantage.
The chancellor last week refused to cut stamp duty on share purchases – a move called a ‘missed opportunity’ by the boss of trading platform Interactive Investor.
‘Pernicious’ tax: Investors currently pay 0.5 per cent stamp duty on the price of London-listed shares they buy – or £5 for every £1,000 invested in a UK company
But both main political parties are under pressure to include a pledge to abolish the tax in election manifestos.
Miles Celic, chief executive of lobby group The City UK, said: ‘Stamp duty on shares has hampered Britain’s competitiveness and put us behind other global financial markets.
‘Removing it will remove an investment barrier, encourage more institutional and private investment in UK equities, deliver greater incentives and returns for savers and retirees, and revive our capital markets.
“We need to unleash more opportunities and stimulate investment and we urge all political parties to consider these policies to boost growth.”
Research from consultancy Oxera, commissioned by the Center for Policy Studies, found that scrapping the levy could increase overall tax revenues by around £600m due to its positive impact on growth.
The debate comes amid fears for the health of the stock market as foreign predators surround poorly valued London-listed companies in search of bargains. There are also concerns about companies listing their shares abroad.
In a bid to boost share ownership and investment in British companies, Jeremy Hunt used his budget to launch a UK Isa and confirm that NatWest shares still owned by the government will be released to the public this summer offered.
But experts say more needs to be done. Charles Hall, an analyst at Peel Hunt, described stamp duty on shares as “a pernicious tax that ‘must be abolished as part of a series of reforms to aid recovery in UK capital markets.’
Interactive Investor’s Richard Wilson said the budget was a “missed opportunity” to deliver a “win-win situation for both investors and the economy.”