London, once the undisputed king of European stock markets, is losing its crown. A silent killer stalks the halls of the London Stock Exchange (LSE), slowly sapping its strength – stamp duty on shares. This archaic tax, a 0.5% levy on share purchases, is driving companies away in droves and stifling new listings. As the LSE’s luster fades, experts are sounding the alarm: it’s time for the UK to get serious about stamp duty reform before it’s too late.
The Exodus of Listed Companies
The numbers paint a bleak picture. In 2024, a mere 19 companies joined the LSE, while 88 bid farewell. Giants like Flutter, Ashtead, and Just Eat Takeaway have all fled for greener pastures in recent years. The common thread? Stamp duty makes London less competitive.
As one chief executive puts it: “Of course stamp duty will be a consideration” when choosing where to list. And who can blame them? The US, China, Germany – none burden investors with an equivalent tax. Even runner-up Ireland’s 1% rate seems quaint compared to Britain’s “stamptax”.
A Tax on Investors and Growth
Make no mistake, stamp duty is a double-edged sword. It cuts deep into investor returns and hamstrings companies seeking to raise capital. As the Capital Markets Industry Taskforce notes:
The UK currently taxes its retail investors with SDRT when buying a UK-listed Aston Martin share but not when buying a German-listed Porsche share or US-listed Tesla share.
This blatant disadvantage is more than just an annoyance – it’s a significant drag on London’s appeal and a barrier to economic growth. In an increasingly globalized and competitive landscape, the LSE can ill afford such self-sabotage.
Resuscitating London’s Markets
So what’s the solution? In a word: reform. Slashing stamp duty – or even abolishing it entirely – could breathe new life into London’s capital markets. Yes, the £3.8bn it generated for the Treasury in 2022-23 makes for a tough political sell. But the long-term benefits of a thriving, competitive stock exchange far outweigh this short-term revenue hit.
The UK has already taken steps to boost London’s appeal, from revamping listing rules to encouraging UK pension funds to invest more domestically. Yet stamp duty reform remains conspicuously absent from these efforts. It’s the elephant in the room policymakers can no longer ignore.
Time to Act
London still boasts many advantages, as evidenced by the robust £24.3bn in follow-on offerings last year. But its dwindling listed company count – likely to slip below 1,000 for the first time in decades – is a red flag that cannot be dismissed. The clock is ticking.
If the UK government is sincere about revitalizing its capital markets and securing London’s place as a global financial hub, confronting stamp duty must be at the top of its 2025 agenda. Failure to act risks consigning the once-mighty LSE to irrelevance – an unthinkable prospect with devastating economic consequences.
The choice is clear. By taking bold action on stamp duty now, the UK can restore the London Stock Exchange to its former glory and position its capital markets – and economy – for a bright, prosperous future. The world is watching. It’s time to meet the moment and make London a listings powerhouse once again.
