5 Reasons Taxing Crypto Can Boost UK Investments and Economy

UK Should Tax Crypto Buyers to Boost Stock Investing

The UK must rethink its tax strategy by taxing crypto purchases instead of stock purchases, according to investment bank Cavendish’s chair, Lisa Gordon. This shift could encourage Britons to invest in local stocks, supporting economic growth and innovation.

Background and Context

The debate over how to effectively manage taxation in the UK is gaining momentum, particularly in light of recent economic challenges. Lisa Gordon, chair of investment bank Cavendish, has proposed an intriguing shift: taxing crypto to boost investments in local stocks. This proposal matters as it addresses the growing trend of cryptocurrency ownership among younger generations, with data indicating that over half of individuals under 45 own crypto rather than equities.

The historical context underscores the urgency of this discussion. For decades, equity markets have been vital for economic stability and growth, providing crucial funding for businesses. Yet, recent observations indicate that the London Stock Exchange faced one of its quietest years, with a notable decline in new listings. By redirecting taxes from stocks to crypto, Gordon suggests a potential revitalization of the equities market, encouraging individuals to invest in local companies that contribute to job creation and innovation.

As financial pressures rise—particularly due to the ongoing cost of living crisis—this proposal serves as a timely reminder of the need to adapt fiscal strategies. Taxing crypto to boost investments could be a pivotal step in reigniting the UK economy and ensuring that future generations engage more with traditional markets.

UK Should Tax Crypto Purchases to Stimulate Stock Investments

In a bold proposal, investment bank Cavendish’s chair, Lisa Gordon, has suggested that the UK government should tax crypto purchases to boost stock investments and revive the economy. Gordon argues that with over 50% of under-45s owning cryptocurrencies rather than equities, it’s crucial to reshape the investment landscape. “It should terrify all of us that over half of under-45s own crypto and no equities,” she stated in an interview with The Times on March 23.

The UK currently imposes a 0.5% tax on shares listed on the London Stock Exchange, generating approximately £3 billion ($3.9 billion) annually in tax revenue. Gordon believes that scrapping this tax on equities and applying it to crypto could incentivize Britons to invest in local companies, fostering economic growth. “Equities provide growth capital to companies that employ people, innovate, and pay corporation tax. That is a social contract,” she added.

Current Trends in UK Investment

The Financial Conduct Authority (FCA) reports that about 12% of adults in the UK, equating to around 7 million people, own crypto assets, with 36% of these individuals being under the age of 55. Furthermore, a staggering 75% of 18-24-year-olds reportedly hold no investments at all. In response to the ongoing cost of living crisis, the FCA found that 44% of adults have stopped or reduced their savings and investments.

Gordon’s call for taxing crypto to boost investments aligns with broader concerns within the financial sector. The London stock market had its “quietest year on record” in 2023, with only 18 companies listing, according to consulting giant EY. This, combined with 88 companies delisting, highlights the need for immediate strategies to attract investors back to the market.

As the UK aims to position itself as a competitive market, the call to tax crypto purchases could serve as a catalyst for revitalizing stock investing and ultimately strengthen the economy.

Analysis of the Proposal to Tax Crypto to Boost Investments

Lisa Gordon, chair of Cavendish investment bank, advocates for the UK to shift its tax structure by applying taxes on crypto purchases instead of stock investments. This proposal reflects a growing concern for the financial landscape in the UK, particularly given that over 50% of individuals under 45 currently invest in crypto rather than equities. By taxing crypto to boost investments, the aim is to redirect funds into local stocks, potentially revitalizing the economy and supporting companies that require growth capital.

Gordon’s suggestions could alleviate barriers to stock investment, particularly for younger demographics wary of markets due to recent economic pressures. This strategic pivot to taxing crypto might also encourage public listings, breathing life into a stock market that experienced a notably quiet year with only 18 companies debuting. If implemented, such tax reforms could foster a more robust investment environment, enhancing liquidity and attracting more businesses to the UK stock exchange.