Ditch ‘short-sighted’ share tax and lean on City to back National Wealth Fund, Reeves told

The Chancellor should axe the “short-sighted” tax on share trading and “sponsor” a set of listed investment vehicles in order to unlock funding for the government’s investment plans, a body of investors has said today.

In a call to the chancellor, the Association of Investment Companies (AIC), which represents listed investment trusts in the UK, said the Treasury should designate a crop of “partnership funds” that would act in conjunction with its National Wealth Fund, announced by the Chancellor Rachel Reeves in July.

Under the plans, the government said the wealth fund would “crowd in” funding from the private sector. By sponsoring a number of vehicles listed on the London Stock Exchange to invest alongside it, the public would be able to “invest alongside the government”, the AIC said.

“Investment companies in partnership with the National Wealth Fund could offer a new way for investors, from pension funds to individual ISA holders, to fund infrastructure projects, new technologies or the transition to net zero,” said Richard Stone, chief of the AIC.

The Chancellor has suggested that private sector capital and pension cash will be key to the government’s growth plans since taking office in July. After committing an initial £7.3bn to the national wealth fund, the Treasury said it would “mobilise billions more in private investment and generate a return for taxpayers”.

The state-owned British Business Bank and UK Infrastructure Bank were also told to align their work and row behind the plans.

Alongside its calls on the Chancellor today, the AIC said ministers should axe the stamp duty on share trading so as to encourage everyday investors into the market.

“Abolishing stamp duty on shares will simplify the tax system. It will support investment and growth. It is easy to achieve,” the AIC said. “Stamp duty does provide government revenue but retaining this tax is short-sighted. It ignores the benefits of a strong domestic stock market and how it can enhance economic growth.”

The calls come ahead of Reeves’ first budget in October, in which she is widely expected to hike capital gains tax and inheritance tax. 

The Prime Minister, Keir Starmer, has told the country to prepare for a “painful” budget and said those with the the “broadest shoulders” should bear the burden. The Treasury did not respond to a request for comment.