The Treasury is weighing plans to grant newly listed companies a stamp duty exemption in November’s autumn budget, as ministers look to revive London’s competitiveness as a global IPO hub.
Officials are considering a two- or three-year holiday on the 0.5% tax levied on UK share transactions, according to reports. The move would form part of chancellor Rachel Reeves’s wider capital markets reforms designed to encourage more businesses to list in the UK.
Investors currently pay stamp duty when purchasing UK-listed shares, a system that many in the City argue discourages investment at a time when London is trying to regain ground lost to New York, Frankfurt and Asian markets.
The US, China and Germany impose no such tax, while Ireland’s 1% levy is the only higher rate in a major developed market. London’s Alternative Investment Market (AIM) is already exempt.
City figures have long called for the complete abolition of stamp duty on shares, suggesting the boost to market activity could ultimately increase tax revenues. But with stamp duty raising £3.3 billion in 2023, or around 0.3% of total tax take, a full removal may be difficult to justify against a tight fiscal backdrop.
Reeves has already acknowledged that Labour’s manifesto pledge not to raise taxes is under strain due to global conflicts, higher borrowing costs and new US tariffs. Against that backdrop, a tax cut for City investors may prove politically sensitive.
Still, targeted relief for IPOs could align with the government’s strategy to attract high-profile listings back to London. Three companies — Beauty Tech, Princes, and Fermi America — have announced listing plans this month, while lender Shawbrook is expected to press ahead with a long-awaited IPO.
Jonathan Parry, partner at White & Case, said: “A stamp duty holiday on LSE listings would send another powerful signal that London is open and actively competing for IPO business. Removing this additional tax for investors in newly listed companies would help stimulate demand, attract global capital and support valuations.”
A Treasury spokesperson added: “We’re making the UK the best place in the world for businesses to start, scale, list and stay. We’ve already exempted PISCES transfers from stamp duty and taken forward ambitious reforms to strengthen public markets, with three more companies announcing plans to float in London this month.”
While no final decision has been made, Treasury officials are under pressure to send a strong message that London remains an attractive listing venue. Any stamp duty holiday would also test whether targeted relief can meaningfully shift global IPO flows back to the UK without creating a long-term hole in tax receipts.
