UK is ‘taxing the London stock market out of existence’: Rachel Reeves calls for scrapping stamp duty on shares

The head of one of Britain’s biggest investment platforms has claimed the Government is “taxing the stock market out of existence” and called for stamp duty on share trading to be scrapped.

Richard Wilson, chief executive of Interactive Investor, said action was needed after figures showed the London market has suffered the biggest exodus of companies since 2009 this year.

It was the latest call to scrap the tax, which imposes a 0.5 per cent charge on all purchases of UK-listed shares.

And it came as John Farrugia, co-chief executive of brokerage Cavendish, demanded an end to the tax.

Wilson said yesterday: ‘We urge the Government to recognize the magnitude of this problem and act decisively.

‘This is not just for the health of our markets, but for the health of the UK economy. It is a tax in which everyone loses. “We simply cannot afford not to solve this problem.”

The comments come after it was revealed that 88 companies have delisted from the London Stock Exchange this year and only 18 have taken their place, the biggest net exodus since 2009.

The number of new listings in London is on track to be the lowest in 15 years amid a shortage of initial public offerings (IPOs).

This is despite efforts by the Government, regulators and City biggies to try to revive the market by changing regulations and unlocking billions of pounds of pension funds for investment.

The latest blow came this month with the decision by FTSE 100 equipment rental company Ashtead to lift its positions and list in New York.

Others that have crossed the pond include gaming group Flutter, whose brands include Paddy Power.

Wilson said the magnitude of the exodus was “shocking” and dismissed the previous government’s initiatives “whose discernible impact, aside from red tape, has been nil.”

He added: “We believe the elephant in the room is stamp duty. We have been campaigning for a long time to remove stamp duty on UK shares.

“We are taxing the UK stock market into extinction.”

Wilson said London was at a disadvantage compared to Europe, where taxes are lower, and the United States, where they are zero.

And he added: ‘Markets live or die according to the flow, and the stock market today has become non-transferable.

‘This affects depth and valuations and leads to those who can list elsewhere, mostly growth companies, doing so.

“What’s left are mostly legacy industries that will eventually expire or move.”

Cavendish’s Farrugia backed the call to scrap stamp duty, along with other measures, saying reviving the stock market “needs proper government intervention”.

He added: “They have to get rid of that because we play in the UK with one arm tied behind our back.”

Wilson and Farrugia have joined a chorus of city voices, including London’s new mayor, Alastair King, in making the plea.

It comes after figures from fund network Calastone showed Britain’s beleaguered stock market got a reprieve last month as investors piled £317m into UK equity funds, the first inflows since May of 2021.

However, the positive flow was expected to prove temporary.