City taskforce asks chancellor for £1.28bn of listing tax breaks
A lobby group chaired by the London Stock Exchange's chief executive has told John Healey that Britain is losing its best companies at the point they matter most. It wants three tax changes in the 28 October Budget.
The Capital Markets Industry Taskforce has submitted a document to the chancellor asking for tax incentives estimated to cost up to £1.28bn a year, according to The Sunday Times.
The taskforce is chaired by Dame Julia Hoggett, chief executive of the London Stock Exchange. It is a cross-body lobby group that was endorsed by the previous government.
The document warns that the UK risks "becoming forever an incubator nation, exporting its greatest companies just at the point they become globally consequential", the newspaper reported. It cites Arm Holdings, the Cambridge chip designer, as the example to avoid. Arm was listed in London, was bought by SoftBank, and floated in New York in 2023.
There are three proposals, and all three are aimed at pensions and savings rather than at founders directly.
The first is stamp duty, charged at 0.5 per cent on share deals. The document accepts that full abolition may not be palatable, and asks instead for the duty to be scrapped on purchases by pension funds and individual savings accounts.
That is a concession to the Treasury's arithmetic. HMRC statistics show stamp duty reserve tax receipts of £3.05bn in the 2024 to 2025 financial year.
The second proposal is inheritance tax relief on pensions invested in the UK over a 15-year period. The third is a 10 per cent tax credit on dividends for pension funds, a modified version of the credit Gordon Brown abolished in 1997.
The dividend credit is the expensive one. The document is understood to show it would mobilise as much as £125bn of equity by 2042, at an annual cost to the Treasury of up to £742m.
Taken together, the three measures are estimated to move £161bn of capital into UK equities by 2042 at a cost of up to £1.28bn a year over the next 15 years.
The backdrop is a market that keeps shrinking. Bids for listed companies total at least £70bn so far this year, The Sunday Times reported, and the FTSE constituents Beazley and Schroders have both left the market after takeovers.
The document calls the shortage of new listings a "strategic growth problem" rather than an exchange's problem, and says the shrinking of the London market is itself a deterrent to companies thinking of listing there.
The Treasury declined to comment on Budget speculation. It said it continues to evaluate stamp taxes on shares, as set out in the 2025 Budget, which introduced a three-year stamp duty relief for newly listed companies.
For a founder weighing a London float against a New York one, nothing has changed yet. What is on the table is cheaper dealing for the pension and ISA money that would buy the shares, and a Budget date of 28 October to find out whether any of it survives contact with the chancellor.