- Investors pay 0.5% stamp duty on the price of the London-listed shares they buy
- Taxes are expected to raise £3.2bn this year and £23.7bn by 2028-29.
- Other countries impose a lower tax or no fee on stock purchases
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Removing the “pernicious” tax on share purchases would help revive Britain’s faltering stock market, according to senior City figures.
Currently, investors pay stamp duty of 0.5 per cent on the price of the London-listed shares they buy, or £5 for every £1,000 invested in a UK company.
The tax is expected to raise £3.2bn this year and £23.7bn between now and 2028-29, analysis of budget documents shows.
Since many other countries impose a much lower tax or no charge on the purchase of shares, critics argue that the London stock market is at a disadvantage.
The Chancellor refused to reduce stamp duty on share purchases last week, a move the head of trading platform Interactive Investor called a “missed opportunity”.
‘Harmful’ tax: Investors currently pay stamp duty of 0.5 per cent on the price of London-listed shares they buy, or £5 for every £1,000 invested in a UK company.
But the two main political parties are under pressure to include a promise to eliminate the tax in their electoral programs.
Miles Celic, chief executive of lobby group The City UK, said: “Stamp duty on shares has hampered the UK’s competitiveness and put us behind other global financial markets.
‘Its removal will remove a barrier to investment, encourage greater institutional and retail investment in UK shares, provide greater incentives and returns for savers and pensioners, and revive our capital markets.
“We need to unlock more opportunities and boost investment and we urge all political parties to consider this policy to stimulate growth.”
Research by consultancy Oxera, commissioned by the Center for Policy Studies, found that scrapping the tax could increase total tax revenue by around £600m due to its positive impact on growth.
The debate comes amid fears about the health of the stock market as foreign predators circle undervalued London-listed companies in search of bargains. There are also concerns about companies listing their shares abroad.
In an effort to boost share ownership and investment in British companies, Jeremy Hunt used his budget to launch a British Isa and confirm that NatWest shares still owned by the government will be offered to the public this summer.
But experts say more needs to be done. Peel Hunt analyst Charles Hall described stamp duty on shares as “a pernicious tax that “should be scrapped as part of a series of reforms to help the recovery of UK capital markets”.
Interactive Investor’s Richard Wilson said the Budget was a “missed opportunity” to achieve “win-win for both investors and the economy”.