Scrapping stamp duty could boost investment in UK stocks
Brits have called for the removal of stamp duty on UK shares in order to incentivise them to allocate capital into the London market.
Three quarters of investors said that the scrapping of stamp duty on UK shares and trusts would prompt them to take more interest and potentially invest more, according to the latest poll from investment platform Interactive Investor.
This comes after newly listed companies on the London index were granted a three year stamp duty holiday in last year’s Autumn Budget.
The move was welcomed by City officials, but there were calls for the Chancellor to go further and remove stamp duty altogether, in order to prevent investors looking overseas.
Global competitors with no stamp duty include the US, which has lured UK investors through its minimal regulation and AI stock offerings.
However, the UK continues to lead as the most popular region to invest in this year, with 37 per cent of investors confirming their intention to focus on the UK.
In contrast, the US appears to be losing traction among Brits, with just 17 per cent saying that they were looking to invest in the US, down from 20 per cent in June.
Investors are also widening their scope to emerging markets, including in Asia which offers tech and AI investment opportunities away from the AI bubble.
Geopolitical tensions remain a threat
Ongoing geopolitical tensions remained the most significant threat to investor’s portfolios, with 44 per cent expressing concern.
This was up 11 per cent compared to six months ago, while fears of tariffs and potential trade wars were the second largest concern, followed by the state of the UK economy.
These fears led nearly half of investors to maintain their strategy and invest the same amount of capital as last year, with just over a quarter choosing to invest more.
Esmund said: “It’s still very early in the year, so it’ll be interesting to see if investors’ strategies shift should these geopolitical tensions escalate in the coming months.
But so far… retail investors are prepared to hold their nerve despite uncertainty and invest for the long-term.”
Autumn Budget repercussions
Following the Autumn Budget in November, nearly half investors cited the changes to the tax regime as their biggest concern.
The Budget introduced a major shake up to the tax system, including the freeze to income tax threshold, a new council tax surcharge on properties valued over £2m and hiked dividend taxes.
This led over a quarter of investors to express worries over fiscal drag, while 11 per cent noted dividend tax rises.
Meanwhile, changes to the ISA allowance and salary sacrifice were also raised as a concern, however this was just five and four per cent of respondents respectively.
In the wake of the cash ISA slash and dividend overhaul, Esmund noted the importance of utilising tax-free wrappers, such as a stocks and shares ISA, which can “shield our wealth from being eroded by the ongoing individual tax burden.”