Barclays has called for an overhaul of the way investors in UK-listed companies are taxed to help “revive” flagging UK public markets.
Changes needed to make London “internationally attractive” include tax reliefs for investors in businesses that graduate from a junior exchange to the main market, rather than the current “cliff edge”, it argued.
In a report to be published on Monday, the bank also called for the UK to review the 0.5 per cent transaction tax currently levied on a wide range of share purchases on London’s main market.
Reducing or abolishing this “stamp duty on shares” is a popular idea among City of London executives, but would come at a cost to the Treasury, which raises about £3.8bn a year from the levy.
The measures would help to smooth the path between junior markets — Aim and the Aquis Growth Market — and the London Stock Exchange’s main market the report argues.
The Centre for Policy Studies think-tank previously estimated that abolishing stamp duty on shares could increase GDP by between 0.2 and 0.7 per cent in the long run.
The UK is battling to make its equity market more attractive and combat a trend of companies choosing to list overseas or go private.
Recent changes to main market listing rules had removed requirements that were “a barrier for some companies moving from a junior market to a senior market”, Barclays’ report said.
But it argued that its recommendations would encourage private companies to list on junior markets by creating a “positive glide path” towards the main market.
“If we want the UK’s public markets to revive, be strong and sustainable in the long term and be internationally attractive, we need to find firms that are currently at a growth stage that are going to be the next big firms,” said Katharine Braddick, Barclays’ head of strategic policy. “We need that pipeline — of private companies moving to junior, and then senior markets — to operate better.”
Barclays’ report also argues for the extension of reliefs enjoyed by investors in Aim-listed companies for a limited period if these businesses move their listings to the main market. Investors in companies listed on junior markets enjoy reliefs from capital gains and inheritance tax and can also benefit from incentive regimes such as Enterprise Investment Schemes and Venture Capital Trusts where eligibility criteria are met.
Barclays also suggests removing the requirement for a company to publish a prospectus when moving to the main board if it has been listed on a junior market for at least 18 months, and for the government to tailor rules to the needs of junior market companies as it replaces EU laws that the UK kept in place after Brexit.
Barclays’ report aims to widen the focus of the political and regulatory drive to improve the UK’s capital markets, which it said had so far focused on companies listing on London’s main market but should also include smaller companies on growth markets.
This article was written by Michael O’Dwyer from The Financial Times and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.