Rachel Reeves should remove stamp duty from the purchase of shares in smaller firms as a first step in abolishing the levy completely from the UK stock market, campaigners said this weekend.
The Mail on Sunday is campaigning for the tax to be scrapped to encourage investment in the UK stock market and create a level playing field with other countries.
The Chancellor is reluctant to forgo the revenue despite it reducing activity on London markets, which further cuts the tax take.
Scrapping the tax would boost small investors, who have seen their Isas and pensions hammered in Donald Trump’s tariff mayhem.
Under pressure: Rachel Reeves should remove stamp duty from the purchase of shares in smaller firms as a first step in abolishing the levy completely from the UK stock market
The Investment Association, which represents about 250 money managers looking after £9.1 trillion of assets, is now proposing that abolition should be phased in.
It has put forward a blueprint for ‘incremental reductions’ in the tax for sectors that the Government wants to ‘actively support and promote’, such as small and medium-sized firms or those operating in medicine and defence. The UK charges 0.5 per cent stamp duty on share purchases, compared with 0.3 per cent in France, 0.2 per cent in Hong Kong and zero in the US.
As the tax is only charged on UK-registered firms, it incentivises investors to put their money in stocks listed elsewhere.
‘It is unrealistic to expect UK equities to compete in international capital markets unless there is a level playing field on transaction costs,’ the Investment Association said, while acknowledging ministers would be ‘concerned’ about losing tax revenue. But it pointed out that over the past decade, the amount brought in had ‘diminished significantly’.
It said: ‘With less listing and trading in London, the revenue raised by the tax has fallen from a 2007-8 high of £4.1 billion to £3.78 billion in 2022-3. Adjusted for inflation, this represents a staggering 44 per cent drop.’
The association added that the tax take was ‘likely to fall further’ as the UK lags behind rival markets with lower tax rates.
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