Rachel Reeves, the UK Chancellor, is facing increasing pressure to eliminate stamp duty on share trading as a measure to revitalise the London Stock Exchange and stem the tide of companies relocating their listings to foreign stock markets, particularly New York. The 0.5% stamp duty on share transactions is widely viewed within financial circles and the investment community as a barrier to investment and a factor contributing to London’s waning competitiveness in the global capital markets.

Concerns have been heightened by AstraZeneca’s recent announcement that it plans to directly list its shares on the New York Stock Exchange from February 2026. The pharmaceutical giant, one of the UK's most valuable companies, intends to move from trading through American Depositary Receipts (ADRs) to a full listing on the NYSE, thereby accessing a broader US investor base. Although AstraZeneca has reassured stakeholders it will keep its headquarters in the UK and maintain its listing in London and Stockholm, the move signals a shift toward deeper engagement with the US market. Experts warn this could set a precedent that encourages other major UK companies with substantial American shareholders to follow suit, compounding concerns about London’s decline as a financial hub.

This strategic manoeuvre by AstraZeneca follows other signs of tension. Its CEO, Pascal Soriot, has recently paused significant UK-based investments such as a £200 million research facility and cancelled a £450 million vaccine plant, citing dissatisfaction with UK drug pricing policies. Such decisions add to the perception that UK policies and financial structures are becoming less attractive to global businesses.

In response to these developments, city leaders, investment platforms, and industry voices—including firms like IG, AJ Bell, and Hargreaves Lansdown—are advocating for bold government action to abolish the stamp duty on shares completely. They argue that this tax discourages investment in UK companies, undermines retail investor engagement, and weakens market competitiveness at a time when other global markets do not impose similar levies. Gina Miller and the Confederation of British Industry (CBI) have echoed these calls, emphasising the urgency of reviving investor interest and boosting market liquidity.

The Chancellor is reportedly exploring a compromise solution involving a temporary stamp duty holiday on newly listed shares. Such a holiday, lasting two to three years, aims to encourage more companies to choose London for their flotation and attract investors by reducing transaction costs. However, some market commentators, including Charles Hall at Peel Hunt, remain sceptical about the likelihood of Labour scrapping the tax entirely given the current economic climate.

The potential easing or scrapping of stamp duty is seen by many as essential for the London Stock Exchange to regain competitiveness, particularly as firms such as Wise and Flutter Entertainment have already moved their primary listings to the US to access larger pools of capital and more favourable trading conditions. Unlike the UK, major economies like the US, China, and Germany do not impose a transaction tax on share trading, increasing their appeal to both companies and investors.

As the government weighs these options, the broader financial community is watching closely. The future of London’s status as a leading global financial centre may hinge on how decisively the Treasury responds to these pressures to reform stamp duty and attract high-value listings and investment back to the UK market.

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Source: Noah Wire Services