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Investors join forces to call on Jeremy Hunt to end stamp duty tax

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One of Britain’s biggest investment platforms has added its voice to a campaign to scrap stamp duty on investment trust share purchases after calculating that its clients alone had paid £30 million in the tax over the past three years.

Interactive Investor, which has about 400,000 clients, called the levy on investment trusts “anti-competitive and unfair” and it wants Jeremy Hunt to change the rules in the budget next month.

Investment trusts argue that the tax is unfair because it is not imposed on rival investment products, such as funds, and because investment trusts have already paid it once when buying the underlying shares they own.

Richard Wilson, chief executive of Interactive, said his clients buying investment trusts had paid an average of £102 each in the duty last year. “It’s time for the government to level the playing field and recognise that, like funds, investment trusts are a thriving part of the collective investment universe. They have been powering Isa and pension portfolios for generations.”

Stamp duty of 0.5 per cent is levied on all UK share purchases, including investment trusts, but open-ended funds and exchange traded funds are exempt from the levy. Investment trusts are listed entities with independent boards that invest in other companies’ shares and are popular with private investors. They include Scottish Mortgage and F&C, the FTSE 100 companies, and have about £263 billion in assets.

Richard Stone, chief executive of the Association of Investment Companies, which represents most trusts, said: “The current approach taxes investors twice. This double-dipping is normally avoided by policymakers and should be in this case.”

Last month MPs on the Treasury select committee argued for equal treatment of investment trusts because they were better vehicles than open-ended funds to hold illiquid assets, such as infrastructure and green energy assets.

Andrew Griffith, economic secretary to the Treasury, told them: “One always aspires to a level playing field. I am learning rapidly that these things are never quite as simple as we seek, but I understand that point and will take that forward.”

Interactive clients have on average about 22 per cent of their portfolios invested in investment trusts and 21 per cent invested in funds.

Interactive is owned by Abrdn, which manages several large investment trusts, including Murray International, Murray Income and UK Commercial Property Reit.

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