Half a Per Cent Is Why London Loses the Trade

Buy a UK share and you pay a toll. Half a per cent. Every time. New York does not charge it.

That is stamp duty, or stamp duty reserve tax if the shares move on a screen. The rate is the same. GOV.UK says you usually pay 0.5% when you buy existing shares in a UK company. The seller does not pay it. The buyer does. A round trip — buy, then sell, then buy again — pays it twice on the way in.

Half a per cent sounds small. It is not small if you trade often. It is not small if you are the person who spots a price that is wrong and wants to fix it. That trade has to clear the toll before it makes a penny. Some of those trades never happen. The price stays wrong a little longer. The spread stays a little wider. Over a year, that is a lot of trades that never happened.

The money does not vanish. It goes where the toll is not. A pension can buy a US fund and skip the half per cent. A company can list in New York and skip it too. London keeps the tax. New York keeps the trades.

The government is not scrapping the toll. It is renaming it.

On 26 November 2025 HMRC published a paper on modernising stamp taxes on shares. The plan is to replace stamp duty and stamp duty reserve tax with one tax on transfers of securities. The name is the Securities Transfer Charge. There will be an online portal. A reference number. Cleaner forms. The charge itself stays. A new name on the same half per cent is still a half per cent.

That would be a bad swap even if shares stayed on paper. Tokenisation makes it a worse one.

A tokenised share is the same claim, written as a token on a distributed network. It can move from one wallet to another without a stockbroker in the middle. No CREST. No registrar holding the pen. No desk that can say “pay the tax, then we will write your name in the book.”

That last bit is how the old tax works. The transfer does not finish until the tax is dealt with. The registrar is the gate. Take the gate away and the tax has nothing to lean on.

HMRC can still watch the bank. It can still watch the broker. It can still watch the on-ramp, the place where pounds become tokens. It cannot watch every wallet. It cannot stop a transfer that does not ask permission. Once the share has left the old pipes, the toll is optional. People who stay inside the old system pay. People who have already left do not.

You cannot police that. Not properly. A distributed network has no centre. There is no single office to call, no single book to stamp, no single switch to throw. A law that says “pay half a per cent on every move” only works if someone can see every move and stop the ones that have not paid. On a public network, that someone does not exist.

So the Securities Transfer Charge does not save the tax. It walks it into a room where it cannot be collected. Tokenisation does not bring the trades home. It shows people the door.

If the new charge still hits the token, the token will not stay in London. It will trade where the charge cannot reach, or where the charge was never written. US shares already have that advantage. Tokenised US shares will have it too. UK shares will have it only if the toll is gone — on paper, on CREST, and on the token.

A smaller rate is not the fix. A portal is not the fix. A new name is not the fix. The fix is to stop taxing the purchase.

This is the same story as Chapters 7, 9 and 11 of Rails to Freedom. A network with no centre cannot be policed from the middle. A government that taxes the trade loses the trade once people can leave in a few clicks. Tokenised shares are that exit, written in plain sight.

London can keep the half per cent. Or it can keep the market. It will not keep both.

Sources: GOV.UK: Tax when you buy shares + HMRC, 26 November 2025: Modernisation of the Stamp Taxes on Shares Framework