Chancellor Jeremy Hunt has hinted at unveiling a tax-free “British Isa” focused on investing in UK company shares during the spring budget, aiming to rejuvenate the country’s stock market.
The proposed British stock Isa would enable investors to purchase a specific amount of UK company shares without incurring taxes. Presently, the government imposes a 0.5% tax known as the share purchase stamp duty on shares acquired in the UK.
The potential announcement is part of Hunt’s strategy to make cost-free declarations that could garner support from voters and businesses, especially considering the Tories’ trailing position behind Labour in the polls before an anticipated general election.
Jeremy Hunt (Credits: The Guardian)
This initiative could complement the government’s plans to sell shares in NatWest, still 38.6% government-owned since the 2008 taxpayer bailout, to retail investors later this year.
Speaking at an annual dinner hosted by the financial services lobby group TheCityUK, attended by numerous City executives, Hunt expressed his interest in boosting UK capital investment in promising companies.
While not confirming the specifics, he hinted that a British Isa might be part of the budget discussions, emphasizing the potential positive impact on supporting promising UK businesses.
The proposal comes at a time when London’s financial sector faces challenges from competing global financial centers such as New York, Paris, Frankfurt, and Amsterdam, particularly in the post-Brexit landscape.
London’s stock market has witnessed a departure of companies seeking capital outside the UK, with some considering relocation. For instance, Flutter Entertainment, owner of Paddy Power, Betfair, and FanDuel, has contemplated moving its primary listing to New York.
However, Hunt did not indicate a willingness to reduce the 0.5% stamp duty on direct share purchases, a measure some City campaigners argue is a significant obstacle for local investors. City groups, including UK Finance, have advocated for both proposals—the introduction of a British stock Isa and the elimination of stock stamp duty.
In its spring budget submission paper, UK Finance highlighted the need for easily accessible vehicles to incentivize investment in UK equities, suggesting the introduction of a “British Isa” focused on domestic equities.
While Hunt addressed plans to position the UK as the next Silicon Valley, fostering growth in tech-focused stock market listings, he did not provide specifics on reducing stamp duty or potential changes to the Isa regime.
