UK Should Review Stamp Duty on Share Purchases, Barclays Says

Leonard Kehnscherper and Joe Easton
2-min read

(Bloomberg) -- The UK government should review a tax on share purchases to boost the country’s ailing stock market, according to Barclays Plc.

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The stamp duty reserve tax, or SDRT, is a 0.5% transaction levy that applies to share dealings on the main London Stock Exchange, but was abolished for the junior Alternative Investment Market in 2014.

Scrapping SDRT for the main market too would help boost liquidity and make London more attractive for listings, Barclays’s policy development team said in a report published Monday. The recommendations, first reported by the Financial Times, follow similar calls from the Capital Markets Industry Taskforce earlier this month.

London has suffered several blows to its reputation as a listing venue after companies such as building materials firm CRH Plc and online betting group Flutter Entertainment Plc opted to move to New York, in part due to higher valuations in the US. British regulators recently overhauled their listing rules to improve London’s prospects.

Investors continue to pull hundreds of millions of pounds out of UK-focused equity funds each month. Trading volumes have also slumped since the financial crisis, though that trend is broadly similar across European and US markets.

Eliminating stamp duty on shares would come at a cost: The Treasury raised £3.8 billion ($5 billion) from SDRT in fiscal 2023. The Labour government’s first budget is due next month, with Chancellor Rachel Reeves warning of “painful” decisions to repair the public finances.

Other recommendations from Barclays included ending the requirement for a company to publish a prospectus when moving to the main market if it’s been listed on a junior market for at least 18 months. The bank also said the government should sustain tax reliefs for investors in AIM-listed companies for a limited period when the businesses switch to the main market.

“Removing unnecessary frictions for high growth companies looking to graduate into main markets would drive dynamism and agility within UK capital markets,” said Katharine Braddick, Barclays’s head of strategic policy.

Last week, Gamma Communications Plc, one of the biggest companies listed on AIM, said it was considering making the switch to the main market. The move could benefit trading volumes, partly due to the potential subsequent inclusion in FTSE’s main-market indexes.

(Updates to add context throughout.)

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