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Clifford Chance

Clifford Chance


Labour's proposed UK financial transaction tax: What it means for investors, institutions and businesses

18 July 2017

The Labour Party has announced a plan to expand the existing UK stamp duty into a broader financial transaction tax.

Stamp duty currently applies in practice only to UK equities. Labour's proposed tax would cover all equities and debt securities, if there is either a UK issuer or a UK party to a trade. It would also apply to credit and equity derivatives with a UK counterparty.

Many elements of the proposal are currently unclear, however there are in our view significant flaws in its design. In particular, it suffers from "cascade" effects which will greatly increase the effective rate, and these costs will inevitably be borne by pension funds, investment funds and other end users. It will also, despite the claims of its designer, create a strong incentive for funds, investors and traders to migrate from the UK.

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