As ‘unpatriotic’ tax favours foreign firms, investment chiefs demand: Axe stamp duty on shares to save UK stock market

Investment firms are calling for the abolition of stamp duty on share trading to revive London’s stock market and the wider economy.

Bosses at Abrdn, AJ Bell, Hargreaves Lansdown and Interactive Investor told The Mail on Sunday that the main political parties should include a pledge to include the levy in their manifestos ahead of the general election.

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.

It means a saver who buys £10,000 worth of shares in FTSE 100 drug giant AstraZeneca will pay £50 in tax – but nothing to make the same investment in US-listed Amazon. Richard Stone, boss of the Association of Investment Companies, described the levy as “a tax on London” that would give rival financial centers an advantage.

Abrdn chief Stephen Bird branded the tax “as unpatriotic as it is economically destructive” and said “its abolition could be the biggest boost to British share ownership.”

And AJ Bell boss Michael Summersgill said abolishing stamp duty was “a no-brainer”, while head of Interactive Investor Richard Wilson warned: “We are burdening the stock market with its very existence.”

Calls to scrap the tax – which will raise £3.2 billion this year and £23.7 billion between now and 2028-29 – come amid fears that London’s stock market is losing its luster. Having already seen Cambridge-based microchip manufacturer Arm list in New York, the city faces an uphill battle to convince consumer goods maker Unilever to bring its £15 billion ice cream business to London rather than Amsterdam or Wall Street.

At the same time, foreign buyers are circling the London stock market, hunting for undervalued companies to buy cheaply.

Attempts to reverse the situation – such as the launch of a UK Isa and plans to sell NatWest shares to the public – are seen as not going far enough.

Now that senior City figures have turned their attention to stamp duty on shares, they are demanding that stamp duty be scrapped by whoever forms the next government. Dan Olley, boss of Hargreaves Lansdown, said: ‘We need to make it easy for people to save and invest for a better future.

‘It is illogical that investors buying UK shares have to pay stamp duty while foreign transactions are stamp duty free. We are not aligned with the G7 and need to level the playing field for UK plc.”

Bird, who has led Abrdn since 2020, said that while successive governments had adjusted stamp duty on property to boost the housing market, investors in Britain “have not had the same signals that share ownership is a practice worth supporting ‘.

He added: ‘Home ownership has become crucial to the way Britons think about their economic lives – a boost that past and present governments have harnessed with measures such as stamp duty on property purchases .

“But if we want to help build the country’s financial resilience, we must also leverage an investment culture. Removing stamp duty on UK shares would encourage more people to invest and send an important signal of intent.

‘By penalizing investors who want to buy British, stamp duty is as unpatriotic as it is economically destructive. Unchanged at 0.5 percent since 1986, while other investment costs have fallen dramatically, stamp duty now represents a completely disproportionate cost.”

Summersgill said: ‘It’s a no-brainer. You should abolish stamp duty on shares. This will open the door to more GDP growth.

“If you look at it with a rational mind, you’d say, ‘Why wouldn’t I do that?’ Stamp duty on shares amounts to around £3 billion of the government’s tax revenue. That is 0.3 percent. If someone came to me and said we could boost our business by eliminating a charge that was 0.3 percent of our revenue, that would be one of the easiest decisions I would make.”

Wilson wrote for The Mail on Sunday: ‘We are burdening the stock exchange with its existence. Why are we punishing investors for investing in UK shares, especially at a time when we want to encourage more of them to support Britain? It just doesn’t make sense.’

• Go visit thisismoney.co.uk/wilson to read more from Richard Wilson