One of the nation’s biggest investment platforms has called for a cross-party commitment to scrap stamp duty on share trading to boost the City and wider economy.
Richard Wilson, the chief executive of Interactive Investor, urged the main parties to pledge to ditch the ‘absurd’ levy in their manifestos for the next General Election.
Investors pay 0.5 per cent in stamp duty on the price of UK-listed shares they buy, or £5 for every £1,000 invested. But the levy does not apply to the purchase of shares in foreign companies.
And it is far higher than the 0.1 per cent to 0.3 per cent typically charged in Europe, while there is no tax on share purchases at all in the US.
So a saver who buys £10,000 of shares in FTSE 100 giant AstraZeneca pays £50 in tax, but nothing for the same investment in New York-listed Amazon.
‘Absurd’: Investors pay 0.5 per cent in stamp duty on the price of UK-listed shares they buy, or £5 for every £1,000 invested
Warning that the tax is deterring investment, and in turn harming the economy, Wilson said: ‘It’s potty. It’s a journey to oblivion. It’s absurd.’ He said Chancellor Jeremy Hunt and City minister Bim Afolami are ‘sympathetic’ to pleas to scrap the tax, which is set to raise £3.2billion this year and £23.7bn between now and 2028-29.
‘They are sympathetic but they argue it is an affordability question,’ Wilson said. ‘My view is they cannot afford not to.’
Asked about Labour’s view, he added: ‘Lord knows.’ But calling for both parties to commit to scrapping the tax in their manifestos, Wilson said: ‘They absolutely need to if they are serious about government and innovation in the UK.
‘Liquidity in the markets is like our oxygen. The markets need it to breathe. By taxing transactions, we choke the air supply and make the markets weak, and then one by one the players leave. Give us back our level playing field, and let the London financial markets do what they do best: to compete, to innovate, to win.’
Laith Khalaf, of rival trading platform AJ Bell, said: ‘Stamp duty on shares brings in around £3billion to £4billion a year for the Exchequer, so it’s not insubstantial, but cutting it could provide a boost for the UK stock market and reduce the cost of capital for UK-listed firms.’
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