New research brings to light the UK’s alarming lack of awareness for the Stamp Duty Reserve Tax (SDRT) charged on British stocks.
Currently, investors in UK stocks pay 0.5 per cent on stock transactions over £1000. This tax year alone, the British Government expects to pocket almost £4 billion* through the stamp duty.
Yet a recent survey of 2,176 UK residents finds only 19 per cent of Brits are aware they’re taxed in this way on UK stocks. This compares to three quarters, who are familiar with stamp duty on purchasing a house. A shocking 93 per cent do not know how much stamp duty is currently charged on UK stock investments. Three quarters do not know which countries, outside of the UK, require you to pay stamp duty on stocks.
Iqbal V. Gandham, UK Managing Director at eToro said: “Stamp duty is the ultimate stealth tax and should be scrapped. British investors have been unknowingly handing over money to the Government through this tax. This needs to stop and it needs to happen now.”
When made aware of the stamp duty on British stocks support for abolishing the tax is strong. Of those who responded either support or oppose, over half support scrapping the tax. Among this group, the primary drivers for abolishing the tax are that it acts as a deterrent to investing, it is an outdated tax and it doesn’t make sense because other assets aren’t taxed in this way.
When asked about the deterrents to investing in UK companies, stamp duty was as big a barrier as Brexit. One fifth of people said they would be less likely to invest in UK companies knowing they had to pay stamp duty on these stocks compared to 19 per cent of people who said they will be less inclined to invest in British stocks in a post-Brexit world.
Gandham continued: “Penalising UK investors for choosing to invest in British businesses is madness. Why are we incentivising people to invest money overseas? With continued Brexit uncertainty, now more than ever, we should be supporting investment into UK companies. The UK is in the minority; few other countries profit from their residents investing in local businesses. It’s time to rethink this outdated practice.”