UK Stamp Duty Tax: New 3-Year Exemption for London Stock Market Listings

The UK government has announced a significant shift in its approach to stamp duty on share trading, unveiling a temporary exemption aimed at breathing new life into London’s stock market. The policy arrives at a time when the UK is competing with global financial hubs—particularly New York—for new company listings and investment activity.

What Is Changing?

For a period of three years, newly listed shares on the London Stock Exchange (LSE) will no longer be subject to stamp duty.
This tax is normally charged at 0.5% on the purchase of newly listed shares, which some critics have long argued discourages trading and reduces market attractiveness.

Why Introduce a Tax Holiday?

The decision is part of the Labour government’s second annual budget, announced by UK finance minister Rachel Reeves. The goal is to counteract a trend of companies opting for U.S. markets—especially New York—where they often expect higher valuations and greater access to investment capital.

The government hopes that relieving buyers of the 0.5% duty will make London listings more appealing and stimulate trading activity.

Perspectives and Reactions

The announcement has been met with mixed reactions across the finance and legal sectors:

Some experts and investors believe the temporary exemption could spark interest in new London listings, helping draw in global capital that has been increasingly looking elsewhere.

Others, however, argue that temporary relief is not enough. They call for the complete abolition of stamp duty on all share trading as a more definitive strategy to revive the competitiveness of UK capital markets.

Julia Hoggett, CEO of the London Stock Exchange, welcomed the measure and described it as an “important first step”—implying support for the direction of the policy while recognizing that more reforms may be needed.

Market Context

Government figures indicate that stamp taxes on shares and other eligible securities fell by 15% from £3.2 billion between the 2022–23 and 2023–24 financial years. This decline underscores broader concerns about reduced trading volumes and a slowing market environment—issues the new exemption aims to address.