UK Share Stamp Duty Threatens London Markets Global Competitiveness Says City Experts

The City of London’s financial leaders are mounting fresh pressure on the government to reform the 0.5 per cent stamp duty on share purchases, warning that the levy is severely undermining London’s position as a global financial hub.

British investors currently face a 0.5 per cent tax on share purchases, a rate significantly higher than European counterparts and notably absent in the United States. The disparity becomes particularly stark when comparing to France and Spain, where companies valued under €1 billion are exempt from such charges, and larger enterprises face only 0.3 per cent and 0.2 per cent levies respectively.

Charles Hall, head of research at Peel Hunt, highlighted the policy’s detrimental impact, stating that “stamp duty makes the UK uncompetitive in an increasingly global financial market.” Hall pointed to perplexing inconsistencies in the system, including exemptions for cryptocurrency purchases and certain hedge fund derivatives.

The impact on international investment is becoming increasingly evident. Panmure Liberum’s head of research, Simon French, recounted conversations with American fund managers who expressed reluctance to increase their UK market exposure specifically due to the stamp duty burden, despite attractive valuations.

While the Treasury benefits substantially from the levy, collecting £4.32 billion in the last tax year – a third more than the previous period – critics argue this short-term gain comes at the cost of long-term market competitiveness. Jupiter fund manager’s chief executive, Matthew Beesley, described the continuation of the tax as “mystifying” given its impact on market dynamics.

Industry experts suggest a reduction to 0.2 per cent could reinvigorate the UK equity market, though complete abolition appears unlikely given current fiscal constraints. The Treasury maintains its position, stating that “stamp taxes on shares raise considerable revenue to help fund vital public services,” while pointing to existing exemptions designed to support growth.