Investors express concern over £4.4bn government profit from share transactions
Revamped Article:
British investors are pushing for government action on a controversial 'share tax', which raked in a whopping £4.4bn last year, raising concerns it's choking London's capital markets' growth.
Labour MP Rachel Reeves wants to stir up the UK's retail investment culture, a move she believes will boost taxes and generate more economic growth. But heavyweight investors aren't pleased, warning that the tax has tarnished the London Stock Exchange's (LSE) allure. They argue that one simple adjustment could entice more Britons to invest.
At present, the government applies a 0.5% tax when investors buy shares, including for stocks and shares ISAs. AJ Bell's Dan Coatsworth suggests axing the tax for ISAs, claiming it would cost the government a mere £120m based on AJ Bell clients' stamp duty payments over the past year. Coatsworth feels this nominal amount could spur UK-listed businesses' growth.
"Reeves should reassess the effect of stamp duty on UK shares," Coatsworth urges. "While cancelling stamp duty across the board might worry the Chancellor, creating a carve-out for ISAs would cost a mere fraction of that sum."
Concerns about the tax's impact on the UK's competitiveness have grown as more significant companies bypass the LSE for listings. European competitors boast lower taxes, and the US imposes no transaction tax on shares, making New York a more enticing destination for investors.
London-based Bowmore Asset Management's chief investment officer, Jonathan Webster Smith, is among those clamoring for change. He maintains the tax siphons liquidity and damages the UK's financial standing. "The government should promptly address this issue by abolishing the stamp duty," he contends.
The city's Lord Mayor, Alastair King, recently called for a rethink on stamp duty. He questions why investors aren't taxed when buying shares in global companies like Tesla but face taxation when investing in national brands like Aston Martin.
Hargreaves Lansdown has chipped in as well, claiming a stamp duty reduction or elimination could "nudge" more people towards investment, unlocking hidden investment funds for businesses to thrive and boost personal finances.
In summary, the 0.5% stamp duty levied on share transactions continues to create costs and potential impediments for trading and investment in the UK. Despite forthcoming reforms planned for 2027, there's no indication thus far that the government plans to eliminate the stamp duty on shares to stimulate investment directly.
- British investors are advocating for the government to reconsider the controversial 'share tax', fearing it hampers the growth of London's capital markets.
- Labour MP Rachel Reeves is advocating for a change in the UK's retail investment culture, believing it could raise taxes and stimulate economic growth, but heavyweight investors object, citing the tax's negative effect on the London Stock Exchange.
- Dan Coatsworth of AJ Bell suggests abolishing the tax for Stocks and Shares ISAs, arguing that this nominal change could spur growth in UK-listed businesses and boost the economy, while costing the government only £120m based on AJ Bell clients' stamp duty payments over the past year.
- Increasing concerns about the tax's impact on the UK's competitiveness have arisen as more significant companies bypass the LSE for listings, with European competitors offering lower taxes and the US imposing no transaction tax on shares.
- Various finance and investment experts, including Jonathan Webster Smith of Bowmore Asset Management, Alastair King, the city's Lord Mayor, and Hargreaves Lansdown, have called for the abolition of the stamp duty, claiming it siphons liquidity, harms the UK's financial standing, and could nudge more people towards investment, ultimately benefiting personal finances and businesses.
