UK Banker Calls for Crypto Tax to Boost Stock Market Investment

Lisa Gordon, chair of investment bank Cavendish, has suggested applying a tax on cryptocurrency transactions while scrapping the stamp duty on stock purchases. She believes this change could encourage more people to invest in UK-listed companies, strengthening the country’s economy.

Speaking to The Times, Gordon said, “It should terrify all of us that over half of under-45s own crypto and no equities.” She argued that the UK should make equities more attractive by removing the 0.5% tax on share purchases and introducing a similar charge on cryptocurrency buys instead.

Current Tax System and Stock Market Challenges

At present, investors must pay a 0.5% stamp duty on shares listed on the London Stock Exchange. This tax brings in around £3 billion ($3.9 billion) per year but may be discouraging investment in UK stocks.

The London stock market has struggled in recent years. A report from consulting firm EY showed that only 18 companies chose to list on the exchange last year, while 88 firms either delisted or moved their listings to other markets. Many cited lower valuations and liquidity concerns compared to exchanges in the United States.

Concerns Over Crypto Ownership and Declining Equity Investment

The Financial Conduct Authority (FCA) has indicated an increase in cryptocurrency ownership, with 12% of adults in the UK—approximately 7 million individuals—currently possessing digital assets. A significant portion of these investors are below 55, with an increasing number of younger people opting for cryptocurrency instead of conventional investments.

Gordon is concerned about this shift. “Equities provide growth capital to companies that employ people, innovate, and pay corporation tax. That is a social contract,” she said. She believes a tax adjustment could push more people toward stocks, benefiting the economy in the long run.

FCA data from 2022 showed that while 70% of UK adults had savings accounts, only 38% held stocks, either directly or through tax-free investment accounts. Among those aged 18-24, nearly three-quarters had no exposure to equities at all.

Economic Pressures and Market Uncertainty

Rising living costs have also affected investment behavior. In the year leading up to January 2024, 44% of UK adults either reduced or stopped saving and investing. Some used their existing savings or sold investments to manage daily expenses.

In the meantime, cryptocurrency markets have experienced volatility. Bitcoin (BTC), which was priced at over $85,000 in early March, has fallen 11% in the last month. Nevertheless, in the last 24 hours, it has increased by 3.5% to approximately $87,207, based on Coingecko data.

Gordon views UK equities as a more reliable long-term investment choice, characterizing the nation as a “safe haven” in contrast to markets such as the US, where worries about trade policies and economic circumstances have led to volatility. She thinks transferring the tax obligation from stocks to crypto could encourage additional investment in the UK economy.