The Association of Investment Companies (AIC) has called for the abolition of stamp duty on investment companies, arguing that it perpetuates an uneven playing field between investment companies and open-ended funds.
The call follows a meeting of the Treasury Committee on 10 January in which the question of levelling the playing field for investment companies was discussed.
Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “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.”
The AIC’s recommendation is that stamp duty is abolished on the shares of UK investment trusts, UK REITs and VCTs.
Supporting the growth of the UK investment company sector would also boost investment in infrastructure, renewable energy and other less liquid assets that are important for sustainable economic growth.
Richard Stone, Chief Executive of the Association of Investment Companies (AIC), 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.”
