UK Chancellor Urged to Cut Investment Costs to Boost Economy

The UK's Chancellor, John Healey, faces calls to reduce the cost of investing in domestic companies as a strategy to stimulate economic growth and foster wealth creation. The Association of Investment Companies (AIC) has specifically urged the government to eliminate stamp duty on share trading and reinstate tax relief for investors supporting start-ups.

Richard Stone, chief executive of the AIC, emphasized the need for decisive action to unlock growth, stating, "The UK needs more investment if it is to deliver the Chancellor’s ambitions for greater productivity and economic growth." He further advocated for the creation of an investment culture, transitioning the nation "from a nation of savers to a nation of investors."

These recommendations come amid concerns that the London stock market has become a target for foreign acquisitions, with approximately £80 billion in takeover deals occurring this year. The shortage of new listings, or initial public offerings (IPOs), exacerbates the issue, as companies leaving the market through takeovers are not being replaced.

Chancellor Healey recently expressed a desire for the UK to be a "country of wealth creation," though this statement was made in the context of significant job cuts at Jaguar Land Rover and the relocation of a major taxpayer to Greece. The AIC proposes practical measures to counter these trends, including the removal of the 0.5 percent stamp duty levied on trading UK-listed shares, a tax not applied to US stocks. The organization argues that scrapping this duty would make London's stock market more appealing to both companies and investors, thereby attracting private capital and benefiting the economy and public finances.

Additionally, the AIC is urging Healey to reverse his predecessor's decision to reduce tax relief for venture capital trusts (VCTs) from 30 percent to 20 percent. Stone highlighted the critical role of VCTs in enabling companies to scale while remaining in the UK, contributing to the domestic economy. The AIC believes that restoring VCT tax relief to its previous level is essential for supporting ambitious companies with high growth potential.