Nine in ten UK investors would back UK stocks if the share tax was scrapped

Tradu CEO calls for Chancellor to completely scrap stamp duty on share purchases to address investment crisis

Almost nine in ten (88%) UK retail investors would increase their investment in UK stocks if the Government scrapped stamp duty on share purchases, with 44% ‘significantly increasing’ investments, according to new research from Tradu, the powerful multi-asset trading platform owned by Jefferies Financial Group.

The UK has the lowest retail investor engagement rate in the G7. From 1963 to 2022, retail participation plummeted from 54 per cent to 10.8 per cent, and the proportion of UK households directly owning stocks has halved since 2003, according to the Office for National Statistics.

Ahead of the Autumn Budget, Tradu surveyed over 800 UK retail investors to uncover the reasons for this low engagement and barriers to investing in UK firms. It found that 86% view stamp duty on shares as a barrier to investing in UK companies, while more than half (52%) believe it damages the competitiveness of the UK stock market, highlighting the urgency for reform.

The research also reveals concerns about the UK market’s attractiveness amidst intense global competition. More than half (54%) of retail investors surveyed believe US stocks are more attractive than UK stocks. The top three reasons were strong corporate earnings (60%), dominance of tech and innovation (58%) and lower tax obligations (54%).

To stop the rut, the Treasury is currently considering a stamp duty holiday for new listings on the London Stock Exchange, demonstrating growing recognition that the levy undermines competitiveness. Meanwhile, the Chancellor has proposed a ‘Tell Sid’-style advertising campaign that could cost the City of London up to £120 million in a bid to increase retail investment in UK stocks.

Brendan Callan, CEO of Tradu, commented: “The reality is that UK investment is in crisis. Just £184 million was raised on the London Stock Exchange in the first nine months of this year, and London has plunged to 23rd place in the global IPO rankings. Companies are moving their listings to the US, pension fund allocations are shrinking, retail investor engagement has fallen off a cliff, and there are new negative headlines every week.

“We need to pull UK investment back from the brink, and that means bold action. A proposed three-year ‘stamp duty holiday’ for new listings shows the government recognises that the share tax is a huge barrier. But half measures won’t solve the problem. The quickest way to start turning the tide is to abolish the share tax altogether.

“Our research shows that scrapping the share tax would energise retail investors, and this can power UK growth. A more active retail investor base, like those seen in Sweden or Australia, could unlock up to £740 billion to fuel the economy. If the government is serious about revitalising the UK stock market, abolishing the share tax must be the number one priority, and the Autumn Statement is the moment to do it.”