Hargreaves Lansdown: Don’t leave retail investors out of the Budget

Hargreaves Lansdown has called for the government to not leave retail investors behind in this month’s Budget as it mulls changes that could risk shrinking the number of retail shareholders.

The plea comes amid the government’s flagship investment summit, as Prime Minister Keir Starmer attempts to attract billions of pounds in investment from big institutional investors.

“While wooing these captains of industry is important, there is an under-used army of retail investors who also need to be recruited,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

The investment platform noted that the share of households in the UK that directly own stocks and shares has halved in the last two decades, from 23 per cent in 2003 to 11 per cent in 2022.

Fears have begun to spread in the investment industry about a host of plans that could further cut that number down, from removing inheritance tax breaks for stocks listed on London’s junior market to changes in the capital gains tax system.

Rumours of plans to change the Stocks and Shares ISA have also begun to float around the City, with Streeter stating it was “vital” to keep retail investors “enthused about investing” by maintaining the tax free wrappers.

Hargreaves Lansdown also joined the growing calls to cut the stamp duty on UK share transactions, which critics say makes investing in London-listed firms less attractive.

Research from the Centre for Policy Studies earlier this year found that scrapping the tax could increase the overall tax take by around £600m due to its positive impact on growth.

“While the National Wealth Fund has lofty ambitions to attract inward investment from the big beasts of global finance, opportunities need to be created for armies of smaller retail investors, who together would be a significant force for good in helping boost growth,” Streeter concluded.

“Opportunities to invest in growth companies are few and far between with retail investors left out of most the stock market flotations, so providing them an ‘in’ to the global wealth fund would be a hugely welcome move.”