The leader of Abrdn has said that abolishing the tax on share purchases would boost the economy and increase investment in British companies, adding to growing calls for the 0.5% levy to be scrapped.

Sir Douglas Flint said that the abolition of stamp duty on shares, which he described as a “grit in the gears”, would lead to more investment in UK equities.

“Savers are paying for it,” he told The Mail on Sunday, adding that it is “not a good idea if you want to encourage a culture of share ownership.”

In recent months, numerous companies and industry associations have criticised the share trading levy, arguing that it disadvantages British investors and hinders the flow of capital at a crucial time for the market.

The London Stock Exchange has come under scrutiny as many companies like Arm and Flutter have left London in search of higher valuations and often head to New York.

The levy is currently levied on every share transaction of a company registered in the UK and raises around £3.3 billion for the Treasury each year, effectively 0.3 per cent of total UK tax revenue.

According to Flint, there are three reasons for abolishing the tax: “Firstly, it is a cost that has to eat into people’s savings. Secondly, it is an incentive not to invest in British companies. Thirdly, liquidity is good for markets, but if you introduce a barrier in the form of a cost to every deal, you restrict them.”

Despite these demands, ministers and regulators show no signs of backing down on the tax, with the Treasury claiming it is a source of revenue that does not “hinder companies’ ability to raise capital” and does not affect “London’s position as a global centre for company listings”.

But studies show that investors are very interested in British stocks. And this interest could increase even more if the tax is abolished. A survey by Abrdn found that over a third of respondents would rather invest £1,000 in the British market than in other markets.

And the Centre for Policy Studies (CPS) has found that abolishing the tax could boost pensions, savings and investment at little cost to the taxpayer.

The think tank has said that abolishing the levy, which it calls a “tax on growth”, would result in a £6,000 boost to pension funds and a 0.7 per cent increase in long-term economic growth. Business investment could increase by £6.8 billion, compared with the £3.2 billion the tax is expected to raise this year.