The Association of Investment Companies has called on incoming prime minister Andy Burnham to help “save our stock market” by abolishing stamp duty and reversing last year’s reduction of tax relief on venture capital trusts (VCTs).
Burnham, the former mayor of Greater Manchester, is poised to replace Sir Kier Starmer as leader of the Labour party, and therefore as PM, on Monday. This follows his election as the MP for Makerfield and his unopposed campaign to succeed Starmer.
While Starmer has said he would stick to Labour manifesto pledges not to raise VAT, income tax or national insurance, the AIC appears to think there’s a chance he could help the UK’s stock market struggling with low valuations and a growing wave of bids from overseas buyers.
Analysis by broker Peel Hunt last week showed that the value of UK-listed companies subject to takeover approaches was 27 times greater than the value of flotations in the first half of 2026.
Meanwhile, last month’s $1.3trn flotation of SpaceX looks to be the first of three mega-cap public offers on Wall Street with Anthropic and OpenAI expected to follow in a trend that will further skew global index funds to the US and deal a further blow to London’s capital market.
AIC chief executive Richard Stone said: “The situation on the London market is now so serious that it requires bolder interventions to save our stock market. Abolishing stamp duty altogether would give the biggest financial return to the UK economy by encouraging more investors to buy UK equities and drive economic growth.
“The new prime minister also needs to do more to change the investment culture in the UK, building on the ‘Take the next step, invest’ campaign to raise awareness of the benefits of investing,” he said.
Stone also appealed for help on behalf of the AIC’s 291 members following a first half in which the £277bn investment companies sector shrank by around £3.8bn. Three mergers, three acquisitions and six liquidations compounded the effect of widespread share buybacks and M&A that AIC data shows have removed up to £40bn in the past three years (ignoring investment returns).
“Investment trusts form a meaningful part of the UK market, making up 36% of the FTSE 250 and seven constituents of the FTSE 100. Investment trusts are currently subject to onerous double taxation given that the trusts themselves pay stamp duty when they buy UK shares, then investors have to pay stamp duty on the shares of the investment trusts,” he said.
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