Chancellor Rachel Reeves’ decision to introduce a stamp duty holiday for newly listed UK shares has been received positively by the investment industry, but they want the government to move toward abolishing the levy entirely.
Investors with stocks and shares ISAs currently pay a 0.5% levy when they buy UK-listed shares – a tax which is quietly buried in the overall fees.
In the 2025 Budget, Reeves introduced a three-year stamp duty holiday on shares for newly listed UK companies, meaning that the usual 0.5% tax on buying shares will be waived for three years after a company’s IPO. It will only apply to new listings, with all other shares still subject to the stamp duty.
Richard Stone, chief executive of the Association of Investment Companies (AIC), said the decision is a “welcome baby step towards reviving UK listing but it must be part of a broader plan to phase this tax out altogether”, noting the chancellor should have been bolder and abolished it permanently on shares of investment trusts and shares purchases within ISAs and pensions.
David Smith, portfolio manager at Henderson High Income, also said the government could be more ambitious to boost the attractiveness of the UK market.
He noted that the 0.5% stamp duty charge is an “outlier” among major global financial centres, such as New York and Frankfurt.
“It is a cost that not only reduces the value of savings but also increases the cost of equity capital for UK-listed companies, potentially leading to lower valuations,” Smith said.
“While the tax currently raises around £3.3bn annually for the exchequer, increased economic activity, higher share prices and additional tax receipts from capital gains and income tax, could offset or even exceed this loss in the long run.”
Meanwhile, Richard Wilson, chief executive of interactive investor, said scrapping stamp duty on shares is crucial if the government thinks retail investors are the answer to boost the UK stock market.
He branded it an “outdated” and “irrational” tax that is “bad for liquidity and bad for growth”.
“It is suffocating investment in British businesses, and it has to go,” Wilson said.
Brendan Callan, chief executive of Tradu, added that the failure to abolish the share tax altogether and enhance financial literacy “means we’re leaving up to £740bn on the table”.
“Tinkering around the edges isn’t working, and it will not be surprising if the government remains in the same place come the next Budget,” he said.
For a full breakdown on everything else you need to know about the Budget, click here.