An investment group is urging the incoming UK Prime Minister, Andy Burnham, to abolish stamp duty on share trading and reverse recent tax changes affecting startup investors, warning that the UK stock market is being taxed into decline. The Association of Investment Companies (AIC) argues that current tax policies are diminishing demand for UK shares, contributing to a trend of foreign takeovers and a shortage of new listings.
The AIC's chief executive, Richard Stone, stated that the situation requires significant interventions to revive the stock market. He emphasized that a thriving capital market is crucial for economic growth, job creation, and fostering new companies. According to Stone, taxing investment demand and driving it elsewhere will hinder prospects for investment and growth, potentially leading to the UK stock market being "taxed into oblivion."
The call comes amid concerns that Britain has become an attractive target for foreign buyers due to low company valuations. Notable UK firms targeted this year include Schroders, Beazley, Segro, and EasyJet. Analysis by City broker Peel Hunt indicated that in the first half of 2026, the value of UK-listed companies facing takeover bids was 27 times greater than the value of new companies listing on the stock market.
The AIC highlighted that a lack of new listings, or Initial Public Offerings (IPOs), means that companies being acquired are not being replaced, leading to a shrinking market. Furthermore, the group warned that major IPOs of AI giants like Anthropic and OpenAI, alongside SpaceX, in New York are likely to draw investors away from the UK.
Currently, investors pay a 0.5% levy on the purchase of UK-listed shares, a tax not applied to shares in foreign companies. For example, a £10,000 investment in a UK company incurs a £50 tax, while an equivalent investment in a US-listed company like SpaceX would not be taxed.
Stone also called for the reversal of a recent decision by Chancellor Rachel Reeves to reduce tax relief for investors in venture capital trusts (VCTs) from 30% to 20%. The AIC believes that supporting early-stage companies through VCTs is vital for nurturing homegrown businesses and encouraging them to list domestically. A decline in VCT funding, they warn, could further push businesses overseas, resulting in missed opportunities for job creation and wealth generation within the UK.