Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the impact on regulated investment firms operating SME Growth Markets being required to charge their members stamp duty on transactions whilst recognised investment exchanges operating equivalent SME Growth Markets benefit from a waiver; and what assessment they have made of the compatibility of this requirement with (1) Her Majesty’s Government’s policy of encouraging innovation in financial services, and (2) the recommendations of the Kalifa Review.

The relief from Stamp Duty and Stamp Duty Reserve Tax for trades in unlisted shares admitted to Recognised Stock Exchanges which are designated as Recognised Growth Markets was introduced in 2014. The relief is designed to boost investor participation in equity growth markets and improve the conditions for growing companies raising equity finance.

Regulated investment firms that are operating SME Growth Markets are able to apply to HMRC for Recognised Stock Exchange and Recognised Growth Market status for their exchange, which will be granted if the exchange meets the relevant criteria. This would then allow their members to qualify for the relief.

The government believes that the relief in its current format strikes the right balance between ensuring revenue for public services and supporting growth for the economy.

However, as with all elements of the tax rules, the government keeps such reliefs under review, including the scope of the Stamp Duty growth market exemption.

Innovation is central to the UK government’s vision for the future of the UK’s financial services sector. The Kalifa Review of UK Fintech, published in February this year, was commissioned to ensure the UK is continuing to create the right conditions for our fintech businesses to grow and compete, both here and abroad. Following the Review, the government and regulators are now delivering its key recommendations.