20th April 2009
Reduce Stamp for 'shot in the arm' to investors and HM Treasury APCIMS tells Chancellor
The Association of Private Client Investment Managers and Stockbrokers (APCIMS) has urged the Chancellor to reduce stamp duty in order to boost financial markets and private investment as well as Government’s tax take.
APCIMS is calling for a pragmatic reduction in stamp duty to 0.25% in order to boost savings, increase HM revenue, maintain the UK’s competitive advantage and increase trading and liquidity.
Although a reduction in stamp duty/SDRT rate to 0.25 per cent would represent a cost to Government APCIMS makes the case that increased trading would provide Government with increased tax receipts in other areas such as capital gains.
Research has suggested that the abolition of stamp duty/SDRT could add as much as £146bn to the value of UK shares, that's around 5% of their current market price.
David Bennett CEO of APCIMS said:
“With over 12 million people dependent on stocks and shares and other financial instruments for their financial futures, it is vital to protect the interests of investors and the investment industry in the UK.
Savings
“APCIMS believes the reduction of stamp duty/SDRT would send a message to business and the public about the value placed by the authorities on saving and investing for the future. At a time when the UK needs to increase its savings ratio this is an important message.
Competitiveness
The stamp duty/SDRT rate of 0.5% is the largest of any G7 country and has not been reduced since 1986. France, Germany, Italy, The Netherlands and Luxembourg have abolished stamp duty. The US stamp duty rate is 0.0003%.
“The issue of international competitive advantage is vitally important. The Government must maintain UK plc as an attractive location for financial services industries and for investors to do business. The continuation of stamp duty/SDRT in the UK in the face of its increasing abolition in competing financial centres can only be seen as a handicap, to the detriment of the UK’s international position.
Trading and liquidity
“A reduction in stamp duty would stimulate investors to buy and sell more shares and bring the benefit of increased business to authorised firms. In addition it would make a valuable contribution to the liquidity of company shares. Such a boost to UK share trading would be a welcome ‘shot in the arm’ during these challenging economic times.
“At a time of economic uncertainty the Chancellor should seriously consider the abolition of stamp and SDRT a part of a recovery package”
- ENDS -
For more information please contact:
Dirk Paterson, Head of Communications, APCIMS
on 020 7448 7100
Mobile: 07944 866 286
Email: dirkp@apcims.co.uk
Notes to editors:
In the submission APCIMS impresses on the government that it is in the country’s collective interest that the UK’s global advantage is not eroded as a result of tax regimes introduced as a backlash to recent circumstances.
In addition APCIMS has highlighted three key issues which are of particular importance to our industry.
- Maintain and develop London as a global financial centre through a benign tax system which encourages growth.
- Planning sufficient time ahead of tax changes for there to be appropriate preparation and consultation prior to implementation.
- Moving the base date for computation of Capital Gains Tax.
Stamp Duty/SDRT
A study by Oxera, “Stamp duty: its impact and the benefits of its abolition”, was commissioned by the Association of British Insurers (ABI), the City of London Corporation, the Investment Management Association (IMA) and the London Stock Exchange in May 2007 .
The report concluded that despite generating revenue of around £3 billion per annum for the Government, the research concludes that the abolition of stamp duty could bring substantial benefits, including:
- A long-run permanent rise in UK GDP of between 0.24 per cent and 0.78 per cent, with an increase in the government tax-take of up to £4 billion (minus lost direct receipts of £2.9 billion);
- A one-off increase in equity valuations – potentially of 7.2 per cent– and could see fixed annual investment by FTSE 350 companies rise up to £6.4 billion; and
- A reduction in UK companies’ cost of equity capital by 7-8.5 per cent, increasing to as much as 10-12 per cent in the case of technology companies and 9-11 per cent in the case of retail companies.
APCIMS
- More than 12 million people in the UK currently invest directly in stocks and shares and other financial instruments to secure their financial futures
- APCIMS represents over 140 firms all over the UK who deal primarily in stocks and shares on behalf of individuals and the institutions in which we have our money
- Around £400 billion of the country’s wealth is under the management of our members
- Our aim is to ensure that the regulatory, tax and other changes across Europe minimize impact on the investment community
- We want to lead the debate on regulation in Europe, with UK regulators and with British parliamentarians to make sure consumers are protected while at the same time our industry flourishes in the UK.