Investment Group Urges Burnham to Scrap Stamp Duty to Boost Stock Market

Andy Burnham is facing calls to cut the cost of buying UK shares, as City figures warn the London stock market risks being taxed “into oblivion” while foreign takeovers mount and new listings remain scarce.

Ahead of the former Greater Manchester mayor’s expected move into Downing Street as Prime Minister on Monday, the Association of Investment Companies (AIC) has urged the incoming government to scrap stamp duty on share transactions.

The trade body also wants Rachel Reeves’ tax changes affecting investors in start-up businesses to be reversed if, as expected, she is removed as Chancellor.

AIC chief executive Richard Stone said conditions had deteriorated to the point where “bolder interventions” were now needed, warning that tax policy was draining demand from Britain’s equity market.

He argued that stronger economic growth in the UK depends on a lively, competitive capital market supported by robust domestic investment.

“Taxing that demand, driving it elsewhere, will destroy any prospect of more investment, more jobs, more companies starting and growing in the UK… delivering no growth and taxing the UK stock market into oblivion,” Stone said.

The appeal comes amid growing concern that Britain has become an attractive “hunting ground” for overseas buyers looking to snap up undervalued UK companies.

UK companies targeted this year include City institution Schroders, Lloyd’s of London insurer Beazley, warehouse giant Segro and airline Easyjet.

City broker Peel Hunt says the value of UK-listed firms subject to bids was 27 times greater than the value of floats in the first half of 2026.

‘Low valuations caused by lack of investor demand provide fertile ground for bargain hunters keen on exploiting the London market’s decline,’ the AIC said as new listings fail to plug the gap. ‘As a result, the London market is shrinking rapidly.’

The AIC warned mega-listings in New York – with AI giants Anthropic and OpenAI set to follow SpaceX to the market – will draw investors to the US from the UK. 

Investors pay a 0.5 per cent levy on UK-listed shares, but that does not apply to buying shares in foreign companies.

So a saver who buys £10,000 of shares in Rolls-Royce or Marks & Spencer pays £50 tax – but nothing on shares in SpaceX.

Stone said: ‘Abolishing stamp duty would give the biggest financial return to the UK economy by encouraging more investors to buy UK equities and drive economic growth.’

He called for Reeves’ decision to cut tax relief on venture capital trusts that invest in start-ups from 30 per cent to 20 per cent to be reversed.

‘If we don’t support home-grown companies, we’ll continue to see businesses head overseas, leading to the UK missing out on job creation and wealth.’

Andy Burnham has been urged to slash taxes on investing to save Britain’s ailing stock market as an avalanche of foreign takeovers and shortage of new listings leave it floundering.

With the former Mayor of Greater Manchester set to take over as Prime Minister on Monday, the Association of Investment Companies called for stamp duty on share trading to be axed.

And it said Rachel Reeves’ tax raid on investors who back start-up companies should be reversed when – as expected – she is sacked as Chancellor after a disastrous spell at the Treasury.

AIC chief executive Richard Stone said the situation ‘is now so serious that it requires bolder interventions to save our stock market’.

The comments follow warnings that Britain has become a happy ‘hunting ground’ for foreign predators on the hunt for bargains due to low valuations.

A host of UK companies have been targeted this year including City institution Schroders, Lloyd’s of London insurer Beazley, warehouse giant Segro, budget airline Easyjet and ingredients maker Tate & Lyle.

At the same time, experts warn that a lack of new listings through so-called initial public offerings (IPOs) means the companies that are bought and leave the stock market are not replaced.

Analysis by City broker Peel Hunt shows the value of UK-listed companies subject to takeover bids was 27 times greater than the value of IPOs in the first half of 2026.

‘Low valuations caused by lack of investor demand are providing fertile ground for bargain hunters keen on exploiting the London market’s decline,’ the AIC said. ‘Meanwhile, a lack of new IPOs is failing to plug the gap. As a result, the London market is shrinking rapidly.’

The AIC warned that a flurry of mega-listings in New York – with AI giants Anthropic and OpenAI set to follow SpaceX onto the stock market – will attract yet more money to the US at the expense of London.

Leading City figures have long called for stamp duty on share trading to be cut or axed altogether to boost investment in London-listed firms – raising their value in the process.

Investors currently pay a 0.5 per cent levy on the price of UK-listed shares they buy – but the tax does not apply to the purchase of shares in foreign companies.

It means a saver who buys £10,000 of shares in FTSE 100 giants such as Rolls-Royce or Marks and Spencer pays £50 in tax – but nothing at to make the same investment in New York-listed SpaceX or Apple.

Stone said: ‘Abolishing stamp duty altogether would give the biggest financial return to the UK economy by encouraging more investors to buy UK equities and drive economic growth.’

And he called for Reeves’ decision to cut tax relief on venture capital trusts (VCTs) that invest in start-ups from 30 per cent to 20 per cent to be reversed.

‘It’s vital to support businesses at an earlier stage of their growth journey by reversing the decision to reduce tax relief on venture capital trusts,’ said Stone.

‘The cut in tax relief from 30 per cent to 20 per cent is expected to lead to a sharp decline in funding for VCTs, which provide the capital to growing businesses as they scale up and prepare to list on the stock market.

‘If we don’t support our home-grown companies, we reduce the chance of seeing successful IPOs on our domestic market. 

We will also continue to see home-grown businesses head overseas, leading to the UK missing out on job creation and wealth.’