- Investment trusts are subject to Britain’s ‘pernicious’ stamp duty regime
- This means savers pay a 0.5% levy when they buy shares in these trusts
- Trusts also charge 0.5% when they buy shares in companies
Britain must abolish the ‘double taxation’ plaguing popular stock market investments to revive the City of London.
Investment trusts – such as Scottish Mortgage and Polar Capital Technology – are listed companies and are therefore subject to Britain’s ‘pernicious’ stamp duty regime.
This means savers pay a 0.5 percent levy when they buy shares in the trusts.
At the same time, the trusts must pay 0.5 percent when they buy shares in companies in which the fund managers invest.
Savers, on the other hand, do not pay stamp duty when they invest in so-called ‘open-ended’ funds that are not listed on the stock exchange.
‘Pernicious’: Experts say double taxation – or ‘double-dipping’ – on listed trusts is ‘unfair’ for the sector
Experts say double taxation – or ‘double-dipping’ – on listed trusts is ‘unfair’ for the sector. They said it also hampers savings and investment and hampers the broader stock market and economy.
Ministers are facing increasing calls to scrap stamp duty on share trading to level the playing field with countries such as the United States.
Leading industry figures told the Mail that if this is not deemed possible, the government should at least abolish this in the area of investment trusts.
Richard Stone, chief executive of the Association of Investment Companies which represents the sector, said: ‘Stamp duty on shares should not be there at all. It is a tax on liquidity. But if you can’t get rid of them completely, they need to get rid of the double dip.
The biggest injustice is that you already have 0.5 percent less before you even start, compared to investing in an open-ended fund.’
He added: ‘The current approach burdens investors twice. Ending this unfairness should be a priority.”
Investors pay 0.5 percent stamp duty on the price of UK-listed shares they buy – but the tax does not apply to the purchase of shares in foreign companies.
A report by city estate agent Peel Hunt describes it as ‘a pernicious tax that is having a material impact on the stock markets’.
Meanwhile, Abrdn boss Stephen Bird has branded the tax as ‘as unpatriotic as it is economically destructive’.