Britain must scrap the ‘double taxation’ blighting popular stock market investments to help revive the City of London.
Investment trusts – such as Scottish Mortgage and Polar Capital Technology – are companies listed on the stock market and are therefore subject to the UK’s ‘pernicious’ stamp duty regime.
This means savers pay a 0.5 per cent levy when they buy shares in the trusts.
At the same time, the trusts are charged 0.5 per cent when they purchase shares in companies the fund managers invest in.
By contrast, savers do not pay stamp duty when investing in so-called ‘open-ended’ funds which are not listed on the stock market.
‘Pernicious’: Experts said the double taxation – or ‘double-dipping’ – on listed trusts is ‘unfair’ on the sector
Experts said the double taxation – or ‘double-dipping’ – on listed trusts is ‘unfair’ on the sector. They said it also holds back saving and investment and hampers the wider stock market and economy.
Ministers are facing mounting calls for stamp duty on share trading to be scrapped to level the playing field with countries such as the United States.
Leading industry figures told the Mail that if this is deemed not possible, then the Government should at least get rid of it on investment trusts.
Richard Stone, chief executive of the Association of Investment Companies that represents the sector, said: ‘Stamp duty on shares shouldn’t be there at all. It is a tax on liquidity. But if you can’t get rid of it completely, they should get rid of the double-dipping.
The biggest injustice is that you are 0.5 per cent down before you have even started versus investing in an open-ended fund.’
He added: ‘The current approach taxes investors twice. Ending this unfairness should be a priority.’
Investors pay 0.5 per cent in stamp duty on the price of UK-listed shares they buy – but the tax does not apply to the purchase of shares in foreign companies.
A report by City broker Peel Hunt describes it as ‘a pernicious tax that is having a material impact on equity markets’.
Meanwhile Abrdn boss Stephen Bird has branded the tax ‘as unpatriotic as it is economically destructive’.
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