LSEG CEO Wants UK Stamp Duty on Shares to 'Go Away'

Julia Hoggett, CEO of the London Stock Exchange Group (LSEG), has called for the complete removal of the UK's stamp duty on share trading. She argues that the 0.5% tax, levied on investors buying British shares, is a "pernicious" policy that discourages investment in the UK economy. Hoggett emphasized that this tax makes investing in UK firms less attractive compared to foreign firms, where no such tax is applied, contributing to companies like chip designer Arm and gambling group Flutter opting for listings in New York.

The LSEG's stance is supported by other industry figures, including Flutter CEO Peter Jackson, who believes abolishing the stamp duty would significantly boost the UK's appeal, and Abrdn boss Stephen Bird, who labeled the tax "as unpatriotic as it is economically destructive." Hoggett highlighted the "perverse tax structure" as a major focus for change, suggesting it prevents the UK from realizing its full economic potential.

The debate over stamp duty has intensified amidst concerns that major UK companies might delist or seek primary listings elsewhere. An internal LSE analysis projected a worst-case scenario where up to 20 FTSE 100 companies, including HSBC, BT, Vodafone, Diageo, BP, and Shell, could follow AstraZeneca's lead in seeking direct listings on the New York Stock Exchange. Such a move could lead to a significant loss in tax revenue for the Treasury, with one estimate suggesting a $200 million loss from AstraZeneca's shift and a potential $2 billion if other companies follow. Peel Hunt estimates that stamp duty generates approximately $3.3 billion to $4.5 billion annually in tax revenue, with FTSE 100 companies contributing the majority.

While abolishing stamp duty could lead to an initial hit to government revenue, proponents argue that the long-term economic benefits would outweigh this. Studies suggest that its removal could increase equity valuations by 7.2%, boost annual investment by FTSE 350 companies by up to $6.4 billion, and reduce the cost of equity capital for UK companies by 7-8.5%. This would make British companies more competitive globally and attract more capital, ultimately benefiting the wider economy through increased savings, capital expenditure, and potentially higher Capital Gains Tax receipts from enhanced market activity.