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AstraZeneca’s move to directly list its shares in New York could cost the UK as much as £200mn annually in lost stamp duty, the Treasury has privately estimated.
The Cambridge-headquartered pharmaceutical group, the largest company on the FTSE 100 by market capitalisation, said on Monday that it was elevating its New York listing in a plan that would give its UK investors an indirect shareholding of the company.
The move, which has prompted further concerns about London’s status as a global listings centre, will hit state coffers as HM Revenue & Customs will no longer collect any stamp duty related to the trading of the company’s shares in the UK. Treasury officials have estimated the hit to be between £170mn and £200mn, according to people familiar with the situation.
Charles Hall, head of research at Peel Hunt, has also worked on the assumption that the government would face a “£200mn hit to stamp duty from AstraZeneca”.
“That’s a big number just from one company going and they need to be on alert for others,” he said.
Hall said that he had previously warned the government it would face this hit months earlier when there had been speculation AstraZeneca could ditch London for New York, fuelled by Sir Pascal Soriot, chief executive, describing the business as a “very American company”.
The £200mn hit comes as the UK government is urgently seeking to raise money in order to plug its fiscal hole ahead of the Budget in November. AstraZeneca’s move also comes as officials are trying to revive London’s capital markets.
Fundraising from IPOs in London has tumbled to its lowest level in at least 30 years, with less capital raised this year than even the Angolan stock exchange. A string of companies have recently shifted their listings to New York or returned to private ownership.
While AstraZeneca will retain its London and Stockholm listings, remain in the FTSE and keep its headquarters and tax domicile in the UK, the company is replacing the American depositary receipts (ADRs) that until now have given US investors exposure to the company by moving to a full US listing.
ADRs are less liquid and harder to trade than ordinary shares and the new status opens the company up to a broader pool of US shareholders. UK investors will, meanwhile, switch from registered shareholders to holders of AstraZeneca depositary interests instead.
The company’s decision comes as President Donald Trump ratchets up the pressure on the pharmaceutical industry to invest in the US and as drugmakers are locked in a fight with the UK government over pricing.
AstraZeneca’s CEO Pascal Soriot previously described the company as a ‘very American company’ © Al Drago/Bloomberg
AstraZeneca’s announcement could also prompt other listed companies with big US businesses and shareholder bases to explore similar steps, equity capital markets analysts have said, which would lead to a further drop in the UK’s stamp duty revenues.
They also warned that the ability to tap into US liquidity without surrendering FTSE status could in time pave the way for a full-scale move away from the UK for some of the country’s largest companies.
The London Stock Exchange has lobbied for a reform of the stamp duty regime, warning it hinders the UK’s competitiveness. The Treasury is set to give a stamp duty holiday to new listings on the LSE, the Financial Times reported earlier this week.
For 2023-24, Stamp Duty Reserve Tax receipts were close to £2.3bn, down from nearly £2.6bn the year prior, according to government data.
AstraZeneca declined to comment.
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The government said: “AstraZeneca’s confirmation that it will stay listed, headquartered and paying tax in the UK brings long-awaited clarity and is good news for jobs, growth and innovation.
“It shows British companies can scale globally, attract international investment — including from US markets — and remain rooted in the UK.”
Aides also flagged the creation of a Listings Taskforce, which they said had been put in place to help government strategically engage with key players in the capital markets and work on ways to make the UK more attractive for listings.
