The Association of Investment Companies (AIC) has urged Chancellor John Healey to abolish stamp duty on share trading, arguing it would help drive economic growth and wealth creation. The call comes as the UK faces a wave of foreign takeovers of domestic companies and a shortage of new listings on the London stock market.
Richard Stone, chief executive of the AIC, stated that "decisive action is needed to unlock growth." He emphasized the importance of fostering an investment culture in the UK to accelerate economic expansion and meet the Chancellor's ambitions for increased productivity. "Growth will be accelerated by the creation of an investment culture in the UK – turning the country from a nation of savers to a nation of investors," Stone said.
Currently, investors pay a 0.5 percent levy on trades of UK-listed shares, a tax not applied to U.S. stocks. The AIC highlighted that a £10,000 investment in a UK company incurs a £50 tax, while an equivalent investment in a U.S. company does not. The association advocates for the removal of this stamp duty, suggesting it would attract more private capital, benefit the economy, and signal the UK's openness to business.
The AIC also called on Healey to reverse a previous decision by his predecessor, Rachel Reeves, to reduce tax relief on venture capital trusts (VCTs) that support start-ups. The relief was cut from 30 percent to 20 percent, a move the AIC believes makes the scheme less attractive and will lead to reduced funding for high-potential companies. "We need to make sure we are supporting our most ambitious companies," Stone noted, adding that VCTs play a crucial role in helping companies scale up within the UK.
These recommendations follow concerns that the London stock market has become a target for foreign entities seeking to acquire undervalued British firms. Approximately £80 billion in takeover deals have been completed this year, affecting companies such as Easyjet, Schroders, Beazley, Segro, and Tate & Lyle. The decline in new company listings through initial public offerings (IPOs) means that companies leaving the stock market via takeovers are not being replaced.