The Lord Mayor of London will rebuke the government for a “misalignment” in its fiscal policy tonight as he calls for ministers to “look again” at a tax on share trading and incentivise investors to back London Stock Exchange-listed companies.
In his first major speech since becoming Lord Mayor in November, Alistair King will urge Prime Minister Keir Starmer to “accelerate” efforts to unleash investment into the UK’s markets and claim the government’s current plans are not going “far enough” or “fast enough”.
“With the pipeline of institutionally-owned and founder-led companies needing to go public over the next few years growing, we should look again at stamp duty imposed on trading in UK shares,” King will say, referring to the stamp duty of 0.5 per cent tax levied on UK share trading.
“It cannot be logically correct that, as it stands, we do not pay tax on purchases of international vehicles such as Tesla, but we are taxed for investing in a British brand like Aston Martin.”
Changing the “misalignment” would provide a “shot in the arm for homegrown companies looking to scale-up”, the Lord Mayor will claim.
King’s speech at the Lord Mayor’s Banquet, addressed directly to Starmer, who is attending the dinner, mark a direct criticism of the Labour government’s approach toward tax in the City.
While the Square Mile has been calling for stamp duty on shares to be ditched for years, both this government and the previous Conservative administration have so far shrugged off the calls.
Plans were drawn up to ditch the charge under former Conservative City minister Andrew Griffith but were later shelved, City AM understands. It is not clear why the plans were not taken forward.
The charge brought in around £3.3bn in revenue to the Treasury in 2023, amounting to around 0.3 per cent of total tax take, according to ONS figures, analysed by City broking house Peel Hunt. The firm has claimed that any short term fall in revenue from ditching the plans “would be more than offset by increases in other taxes” like an uptick in corporation tax and capital gains tax.
The boss of the London Stock Exchange boss, Julia Hoggett, this year described the tax as “pernicious”, while fund management group Abrdn and trade body, the Quoted Companies Alliance (QCA), also called for the charge to be retired for FTSE 250 and smaller companies in the run up to the Budget.
“Scrapping stamp duty on share trading would send out a powerful signal that the UK and City of London are open for business,” QCA chief executive, James Ashton, told City AM today, adding that an equivalent tax does not exist in the US and Germany.
Takeovers of London-listed firms have surged this year (value: £bn)
In his speech to the Lord Mayor’s banquet, King will also call for ministers to encourage more retail investors into stocks and shares ISAs and urge the Chancellor to go further in her plans for pension fund reform.
The Chancellor Rachel Reeves has outlined plans to consolidate the UK’s sprawling local government pension system in a bid to fuel investment into infrastructure projects, private companies and the London Stock Exchange. However, she stopped short of pushing pension fund to invest more in British companies.
“Here in the City, we strongly welcome your Industrial Strategy that recognises the critical importance of the financial and professional services sector in achieving growth. But we must ask ourselves: are we going far enough and are we going fast enough? I believe the answer is no,” King will say.
The Lord Mayor, who founded investment firm Naisbitt Asset Management, said he is also working on a refresh of the Mansion House Compact, which committed the UK’s top pension managers to commit five per cent of their assets to unlisted companies.
Under the changes, more emphasis will be placed on investing in London’s junior stock markets, Aim and Aquis, as well as private companies, King will say.
“The government provides the platform for growth, but it is here, in the City, where the growth will take root. Prime Minister, let us find that growth for you,” he will add.
The government has said that unleashing a wave of investment from pension funds will be at the heart of its growth plans.
“This will unlock more private investment to fuel the government’s growth mission,” the Chancellor Rachel Reeves has said.