Internet Investor

Robin Amlÿt on transaction tax
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The Independent Online

APCIMS IS not an acronym that rollscomfortably off the tongue. Indeed, it is only marginally better than the mouthful it stands for - Association of Private Client Investment Managers and Stockbrokers.

APCIMS IS not an acronym that rollscomfortably off the tongue. Indeed, it is only marginally better than the mouthful it stands for - Association of Private Client Investment Managers and Stockbrokers.

The group recently held its annual conference. As you might guess, this is overwhelmingly a bunch of men in suits with the odd sprinkling of power dressed women. They may also very well be an endangered species. Notfrom the Internet. Most of them already have websites and several are on the cutting edge of the technology on offer to individual investors.

No, what is endangering them is government action or, rather, inaction. If you are already an active investor you will know all about stamp duty, the transaction levy imposed on share purchases at the rate of 0.5 per cent. That may not strike you as particularly expensive but it adds up to some £2bn annually.

It is money the Government will doubtless be unwilling to give up, especially this government. However, no transaction tax is charged in the US and most European governments have also either removed or reformed their trading taxes to exempt the private investor. Remember, there are no geographical boundaries in cyberspace.

That may be a blinding glimpse of the obvious to you but HMG has apparently yet to notice despite the hollowing out of the UK betting industry.

The gaming business is moving offshore to Gibraltar. For example, Ladbrokes International is offering a freephonetelephone betting service based there, which charges only a 3 per cent handling fee compared to the 9 per cent deduction you get slapped with in the UK to cover General Betting Duty and Levy.

Gambling will go overseas, share trading may very well follow. Technology and taxation are a volatile mix and I know which is likely to win.

The arrival of a pan-European market for shares within a year means you would be silly to pay stamp duty buying shares in the UK when you could buy them through a broker based on the Continent and avoid the tax. Food for thought for the Treasury.

At the launch of the new Internet trader myBroker, mentioned a couple of weeks ago in this column, John Paul Thwaytes, chairman of myBroker's owner Options Direct, was singing from a similar hymn sheet, warning that, "if one online investment service trades through Frankfurt, more will follow. This is a clear message to the Government".

If you do still want a broker you can sit across a table from and chat to, check out the new Apcims website. As well as the awful acronym, you will be directed to it if you type in "wanttoinvest" and "wantabroker".

Statistics from the US show that many of those people who do trade over the Internet began their relationship face-to-face. Charles Schwab, the largest Internet brokerage, says that 70 per cent of its customer accounts were originally opened over its "main street" counters.

If trading online reaches a similar level of penetration in the UK market to that achieved in the US then we can expect around two million of us to be trading shares from our home computers.

And we will not just be trading shares in UK-listed companies. At the Apcims conference a deal by the Crest settlement system was outlined in which settlement of trades in shares listed on the Nasdaq-Amex market will be available on Crest next March.

That will mean a substantial drop in your transaction costs when you want to purchase American shares.

Contact Apcims at www.apcims.co.uk www.wanttoinvest.co.ukwww.wantabroker.co.uk

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