The Association of Investment Companies has called upon the Government to abolish stamp duty on investment companies, arguing that it creates an uneven playing field between investment companies and open-ended funds.
It follows a meeting of the Treasury Committee earlier this month, in which the question of levelling the playing field for investment companies was discussed.
Richard Stone, chief executive of the Association of Investment Companies, warned the tax risks holding back the UK investment company sector.
“The UK’s investment company sector is the most successful in the world, having surpassed its US counterpart. However, it is being held back from making an even bigger contribution because purchases of investment company shares are subject to stamp duty. This tax is not levied on competing open-ended funds, which gain an unfair advantage.
“The current approach taxes investors twice, as the investment company itself pays stamp duty when it purchases UK shares. This double dipping is normally avoided by policymakers and should be in this case.
“If the government is serious about promoting the UK’s financial sector and supporting its public stock markets, then ending this unfairness should be a priority,” he said.
The AIC wants the Government to abolish stamp duty on the shares of UK investment trusts, UK REITs and VCTs and says doing so would encourage more investment in renewable energy and less liquid assets.
Stone added: “Investment companies are uniquely well placed to invest in productive assets, such as infrastructure, renewable energy and fast-growing private companies. Abolishing stamp duty on investment company share purchases would boost investment in these assets, as well as helping private investors access a wider variety of investments that could help them achieve their financial goals.”
