eToro
By eToro
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Stamp duty – relief for first time buyers, why not investors?

Happy days for first time buyers! Over the last few years, the UK government has been putting incentives in place to get them onto the property ladder – the most effective perhaps has been cutting stamp duty.

On property under £300,000 there is nothing for them to pay. Zip. Nada. Great!

However, it seems the government is not so keen to help first timers across the board. For those testing out the stock market no such incentives exist, despite them helping to fund UK publicly listed companies (plc) and potentially boosting their own income.

When buying individual stocks or shares in the UK, investors are subject to a 0.5% Stamp Duty Reserve Tax (SDRT), which although sounds minuscule certainly adds up over time.

By comparison, someone buying their first home will save between 2% and 10%, depending on the purchase price. With the average property price in the UK currently standing at £231,000, that stamp duty saving amounts to £2,120.


Your capital is at risk.

The latest figures from HMRC claim 141,100 first-time buyers have bought properties without having to pay stamp duty since it was abolished in November 2017.

A simple calculation reveals how much, on average, the government has lost by extending this relief to first time house buyers – a whopping £299m.

In 2018, HMRC pocketed more than £3.7bn via stamp duty reserve tax on UK shares bought by investors. With an estimated £4bn on the cards for 2019, maybe it is no wonder the government is hesitant to offer any relief for first time investors.

But where there is a will, there is a way and for those first time investors who would consider taking on an element of risk, the SDRT can be avoided by turning their attention to the London Stock Exchange’s Alternative Investment Market (AIM).

Since 2014, there has been this stamp duty exemption on AIM-listed companies. Investing them is a bit riskier than buying shares in companies on the main market. This is because the Alternative Investment Market (AIM) features smaller companies that are often earlier in their growth period than the big boys in the FTSE 100.

Since the exemption was introduced, traders, brokers, and other finance professionals have asked HMRC why it has not been extended to the main market. No answer has been forthcoming.

However, there is a way to avoid SDRT and still invest in the stock market. To maximise your investment, eToro absorbs the costs of stamp duty on UK stocks.


Your capital is at risk.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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