Transaction Tax Proposed for in UK
July 26, 2013 Taxation in UK
LONDON – The UK government may soon look at taxing automated trading of stocks and equity.
On July 25th the Business, Innovation and Skills Select Committee of the UK House of Commons released a statement urging the government to assess the potential impact and feasibility of implementing a financial transaction tax (FTT) on high-frequency trading (HFT) of publicly listed stocks.
The Committee called for a financial transaction tax to be set “… at a level which is the average profit made on a high frequency trade in the UK”, but concluded that further investigation would be needed to identify and addresses the difficulties of enacting the measure unilaterally without diminishing any benefits arising by HFT.
The proposed tax was met with backlash from industry experts, who claimed that financial transactions are already subject to excessive stamp duties and regulatory costs.
High-frequency trading, which is estimated to account for half of all stock trades in the UK, is the practice of using automated computerized systems to buy and sell publicly listed stocks in a very short amount of time, often holding the assets for less than a second before carrying out another transaction.