WMA’s 2015 Autumn Statement Submission – 25th November 2015

The Wealth Management Association (WMA) welcomed the opportunity to submit our Autumn Statement representation and proposals for change.

The first of which is a proposal to remove Stamp Duty/SDRT from equity purchases within Individual Savings Accounts.

Remove Stamp Duty/SDRT from equity purchases within Individual Savings Accounts

Successive governments have used tax-efficient investment schemes – from TESSAs to PEPs to Individual Savings Accounts (ISAs) – as their chief device to try to encourage a long-term savings culture among the public. ISAs have been particularly successful because they have also helped businesses, as people have been encouraged to invest directly in UK companies.  More recently, this concession has been extended to shares in growth companies on junior markets such as AIM.

We believe the ISA is not only the latest but also the best of the schemes designed to encourage people to build their wealth incrementally over months and years, along with its predecessor, the PEP. It has always been a tax concession designed to encourage people to save or invest gradually. The introduction of the Junior ISA affords families the opportunity to extend this benefit to their children, and has been a welcome development.

The ISA could in time become a more versatile policy tool, helping the Government to achieve other goals while always ensuring it encourages direct investment in UK businesses. The stamp duty exemption on AIM shares could be extended usefully to equity purchases in tax-efficient long-term investments such as equity ISAs and Self-Invested Personal Pensions (SIPPs), with negligible impact to the Exchequer but providing a further boost both to investors and to the companies in which they invest.

The cost to the Exchequer is difficult to quantify precisely but when WMA commissioned work in this area in 2014 it was estimated that so-called bought ISA consideration of £15.7 billion would result in loss of SDRT revenue at £78.6 million. It would however enable the Government to market the ISA as a truly tax-free savings and investment wrapper.

The Second is the proposal for a Government-led industry review of the process of bringing companies to market.

Government-led industry review of the process of bringing companies to market

We propose a Government-led industry review of the process of bringing companies to market (both SMEs to the Alternative Investment Market (AIM) and larger companies to the main market of the London Stock Exchange) to establish whether anything more can be done to help growth businesses raise the capital they need.

This could look at a number of areas including:

• The role of corporate  advisers,  in particular  understanding  why equity  issues which would  be  attractive   to  retail  investors   are  only  made  available   to institutions. The float of ScS, the furniture retailer is a recent example.
• The  role  of  nominated  advisers  (nomads)  on  AIM,  to  better  understand  the processes by which they decide whether to proceed with institutional placings or full flotations.
• Particularly on AIM, individual investors provide much of the liquidity but are shut out of too many flotations and have to purchase shares in the secondary market, often at a considerable premium.
• The role of the UK Listing Authority (UKLA), in particular whether UKLA’s listing requirements and guidelines are disincentives to marketing equity and bond issues to retail investors.
• Existing and proposed EU legislation, in particular MiFID II, the CSD Regulation, and the Capital Markets Union, to consider whether they will impose barriers on the ability of companies to raise equity capital from retail investors as well as looking at the impact on those providing a secondary market in SME Growth Market shares.

ENDS