Up to 20 FTSE 100 companies are considering moving their primary share listings to New York, a shift that could cost the UK Treasury an estimated £2bn in lost stamp duty revenue. This trend follows AstraZeneca’s decision to harmonize its global trading by prioritizing a US listing, intensifying concerns regarding the long-term competitiveness of the London Stock Exchange (LSE).
Why FTSE 100 Firms Are Looking Toward New York
The primary driver for companies seeking a US listing is the desire to access deeper capital pools. AstraZeneca, which maintains a valuation of approximately £200bn, moved to upgrade its US presence in September 2023. The company stated this move was intended to provide the "flexibility to access the broadest possible available pool of capital" and to harmonize share trading across London, Stockholm, and New York.
While AstraZeneca remains a member of the FTSE 100, its shift has effectively downgraded the City of London’s status as the primary venue for its shares. Consequently, share trading for the pharmaceutical giant in London is no longer subject to the UK’s 0.5% stamp duty, a change that has already cost the Treasury an estimated £200m.
The Financial Impact on the UK Treasury
The UK government levies a 0.5% stamp duty on most share purchases, a tax that serves as a significant revenue stream for the Treasury. According to internal analysis from the London Stock Exchange seen by The Sunday Times, if 20 major blue-chip companies follow the path set by AstraZeneca, the Treasury could face a total revenue shortfall of £2bn.
Market analysts have noted that the tax burden is a significant factor in corporate relocation decisions. Charles Hall, head of research at the investment bank Peel Hunt, stated there is "a clear risk" to stamp duty earnings if more of the UK’s largest companies decide to harmonize their listings in the United States.
Pressure to Reform UK Share Taxation
The potential exodus has triggered calls from across the financial sector to abolish the stamp duty entirely. Proponents of the move argue that the tax discourages investment and pushes capital toward overseas markets.
Data from the investment platform Interactive Investor supports this sentiment, with a February poll revealing that three-quarters of investors believe removing the stamp duty on UK shares and trusts would increase their interest in the market. Despite these calls, the Treasury has not yet committed to a repeal of the levy.
The Broader Context of Corporate Investment
While the debate over listing venues continues, some companies have maintained a commitment to UK operations despite changes to their trading structure. In April 2024, AstraZeneca announced a £300m investment into its UK facilities, including a £200m expansion of its Cambridge "megalab" and a £100m injection into its site in Macclesfield.
This investment move occurred despite previous tensions between the company and the UK government regarding drug pricing. Other major firms, including BP, Shell, Pearson, and Relx, have been identified in LSE analysis as companies that could potentially replicate the AstraZeneca model, further highlighting the ongoing challenge the London market faces in retaining its largest constituents.