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UK considers giving newly listed company shares stamp duty exemption UK considers stamp duty exemption for newly listed company shares
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As Rachel Reeves’s budget looms, Treasury weighs up proposals to make British markets more attractiveAs Rachel Reeves’s budget looms, Treasury weighs up proposals to make British markets more attractive
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New share listings on London stock exchanges could be given a stamp duty holiday in the autumn budget under proposals under consideration by the Treasury to make British markets more attractive.New share listings on London stock exchanges could be given a stamp duty holiday in the autumn budget under proposals under consideration by the Treasury to make British markets more attractive.
Treasury officials are considering giving newly listed companies an exemption on the 0.5% tax on share transactions at Rachel Reeves’s budget in November, according to a person with knowledge of discussions.Treasury officials are considering giving newly listed companies an exemption on the 0.5% tax on share transactions at Rachel Reeves’s budget in November, according to a person with knowledge of discussions.
One option under consideration is a holiday of two or three years on the tax, according to the Financial Times, which first reported the proposals. However, it is understood that no final decisions have been made, and there are several options being considered.One option under consideration is a holiday of two or three years on the tax, according to the Financial Times, which first reported the proposals. However, it is understood that no final decisions have been made, and there are several options being considered.
Investors must pay stamp duty on the price of the UK-listed shares when they buy them. Critics in the City of London argue that the tax penalises people buying British shares at a time when the government is keen to revive the UK’s previous status as second only to the US as a venue for global stock market listings.Investors must pay stamp duty on the price of the UK-listed shares when they buy them. Critics in the City of London argue that the tax penalises people buying British shares at a time when the government is keen to revive the UK’s previous status as second only to the US as a venue for global stock market listings.
The US, China and Germany do not impose an equivalent tax on share transactions, and only Ireland, at 1%, has a higher rate. Shares on London’s smaller Alternative Investment Market are already exempt from stamp duty.The US, China and Germany do not impose an equivalent tax on share transactions, and only Ireland, at 1%, has a higher rate. Shares on London’s smaller Alternative Investment Market are already exempt from stamp duty.
Some City figures have argued for the complete abolition of stamp duty on shares, claiming that it would bring in more money for the UK exchequer by raising economic activity, although that claim is not proven and would not be likely to materialise immediately.Some City figures have argued for the complete abolition of stamp duty on shares, claiming that it would bring in more money for the UK exchequer by raising economic activity, although that claim is not proven and would not be likely to materialise immediately.
However, a call for complete abolition on stamp duty may not be attractive for Reeves when faced with straitened financial circumstances. Stamp duty on shares generated £3.3bn of tax revenue in 2023, or about 0.3% of total UK tax revenue, according to Peel Hunt, a stock broker.However, a call for complete abolition on stamp duty may not be attractive for Reeves when faced with straitened financial circumstances. Stamp duty on shares generated £3.3bn of tax revenue in 2023, or about 0.3% of total UK tax revenue, according to Peel Hunt, a stock broker.
Reeves has already backed off a previous pledge in Labour’s manifesto not to raise taxes, telling the party’s conference that “the world has changed” because of a mixture of conflicts, US tariffs and higher borrowing costs. In that context, a tax cut for City investors may be relatively unpalatable.Reeves has already backed off a previous pledge in Labour’s manifesto not to raise taxes, telling the party’s conference that “the world has changed” because of a mixture of conflicts, US tariffs and higher borrowing costs. In that context, a tax cut for City investors may be relatively unpalatable.
Nevertheless, it would probably prove popular with investors and businesses, and would fit with the government’s efforts to attract companies to London. Three companies have announced plans to float shares in London this month: the skincare device makers Beauty Tech, the tinned tuna company Princes and the energy company Fermi America.Nevertheless, it would probably prove popular with investors and businesses, and would fit with the government’s efforts to attract companies to London. Three companies have announced plans to float shares in London this month: the skincare device makers Beauty Tech, the tinned tuna company Princes and the energy company Fermi America.
The British lender Shawbrook is expected to kick off its long-awaited initial public offering in London soon.The British lender Shawbrook is expected to kick off its long-awaited initial public offering in London soon.
Jonathan Parry, a partner at White & Case, a law firm, said: “A stamp duty holiday on LSE listings would send another powerful signal that London is open and actively competing for IPO business. Jonathan Parry, a partner at the law firm White & Case, said: “A stamp duty holiday on LSE listings would send another powerful signal that London is open and actively competing for IPO business.
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“Stamp duty on share transfers is one of the remaining areas in which London differs from competing listing venues. By removing this additional tax for investors in newly listed companies, the stamp duty exemption would hopefully help stimulate demand, attract more global capital and support valuations.”“Stamp duty on share transfers is one of the remaining areas in which London differs from competing listing venues. By removing this additional tax for investors in newly listed companies, the stamp duty exemption would hopefully help stimulate demand, attract more global capital and support valuations.”
A Treasury spokesperson said: “We’re making the UK the best place in the world for businesses to start, scale, list and stay, and the FTSE 100 continues to trade close to all-time highs.A Treasury spokesperson said: “We’re making the UK the best place in the world for businesses to start, scale, list and stay, and the FTSE 100 continues to trade close to all-time highs.
“We’ve already brought in growth-boosting changes by exempting PISCES transfers from stamp duty on shares and taken forward ambitious capital market reforms to make our public markets more attractive, with three more companies announcing plans to list in London this month.”“We’ve already brought in growth-boosting changes by exempting PISCES transfers from stamp duty on shares and taken forward ambitious capital market reforms to make our public markets more attractive, with three more companies announcing plans to list in London this month.”