ETF stamp duty cut won’t have large impact in UK: experts

The move by the chancellor George Osborne to cut stamp duty the purchase of exchange traded funds (ETFs) is unlikely to have an overwhelming impact on the industry.

Mr Osborne announced this afternoon in his Autumn Statement that stamp duty would be cut for investors buying ETFs - a move which could be seen as a boost to the sector.

But Alan Miller, co-founder of SCM Private, said virtually all ETFs are based outside of the UK and so had never been impacted by stamp duty anyway.

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Mr Miller, who only uses passive funds in his products, said: “I can assure you I have never paid one penny of stamp duty since we started in 2009,” he said.

“There are no ETF companies in the UK which makes this less than a non-event.”

Matt Johnson, head of distribution for Europe, Middle East and Asia for ETF Securities, said the news “doesn’t have a particularly large impact on the exchange traded product (ETP) industry” in the UK as so many products are domiciled outside the country.

But he did add it was “excellent to see that right up to the top of the UK government the importance of the ETP industry is well understood”.

“ETPs globally have seen exceptional growth during the past few years to more than $2.4trn (£1.4trn) and anything that can help accelerate the pace of European growth is welcomed,” he said.

“For ETF Securities innovation is absolutely central to how we operate as we continue to bring transparent and robust products to market. Regulatory change has impacted our business in many ways so we will always analyse any change and after careful consideration change how we operate if there is a clear benefit our clients.”

Adam Laird, passive investment manager at Hargreaves Lansdown, was more optimistic though.

“I don’t know of an ETF based in the UK but that is because it was not a level playing field,” he said.

“Outside the UK there is favourable tax treatment and now I think we will start to see more products listing in the UK because of this tax change.”

Mr Laird said the London Stock Exchange was the biggest market in Europe for ETF trading, even though vast amounts of the products were domiciled offshore.

“There are lots of products managed out of London but listed elswhere," he said.

“I don’t know what the cost would be but there will be some people who won’t see moving to the UK as a benefit but are reasons people might want to do it.”