Stats › Active, passive and flows › UK stamp duty
About 29% of UK share trading actually paid stamp duty, and the cost of capital estimates differ fourfold
| Estimate | Cost of capital effect | Basis | Commissioned by |
|---|---|---|---|
| Oxera 2001 | 0.72 to 0.87 points, pre tax | Domowitz and Steil converted by a tax wedge and gearing factor | London Stock Exchange |
| Oxera 2007 | 0.50 to 0.60 points, post tax cost of capital | Nominal post tax, 5.4% to 6.5% reduction | Insurers, City of London, IMA and LSE |
| IFS 2002, by turnover | 0.159 points at 25% turnover to 0.636 at 100% | Cost of retained earnings finance, non taxpayer | Independent |
| IFS 2002, revenue recouped | 0.013 to 0.491 points | Same, with the revenue replaced by corporation tax | Independent |
None of these four estimates carries a standard error or a t statistic. The two Oxera studies were commissioned by parties with an interest in abolition, which is stated on their covers and is relevant to how the range is read. The IFS recoupment row is the lowest estimate because it nets off the cost of raising the same revenue another way.
UK stamp duty is 0.5% paid by the buyer, but intermediary relief exempts market makers, so only about 29% of trading bore it in 2005. Published estimates of its effect on the cost of capital range from 0.013 to 0.87 percentage points.
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