Fear is growing within the private sector that Chancellor John Healey is planning to use his inaugural Budget next month to launch another raid.

TheCityUK, which counts the UK’s biggest banks and money managers among its members, joined calls to remove stamp duty on shares, explaining that tax reform should be a “strategic lever” to make the UK more competitive. 

Chief executive of the group, Miles Celic, pointed out that financial services were already a “major contributor” to tax revenue and pay more in corporation tax than any other sector.

He added in the letter to the chancellor: “In a world of cut throat competition for investment, Britain needs to remain competitive. This isn’t solely about the rates of tax. The UK is now shackled with the most complicated and Byzantine tax system in the OECD. This is a major cost to business and a drag on competitiveness.”

Mr Celic warned Mr Healey against “sector-specific taxes” across the financial and professional services industries, which was previously singled out by the government as among the highest potential driver for economic growth.

The group warned that the 0.5% levy imposed on share transaction in a British company made the UK an “international outlier” and weakened the London Stock Exchange and domestic investment.

The group warned that the 0.5% levy imposed on share transaction in a British company made the UK an “international outlier” and weakened the London Stock Exchange and domestic investment.

The CityUK suggested ministers left the multi-billion pound interest payments on cash reserves from the Bank of England to commercial lenders unchanged. It comes after Rachel Reeves introduced a three-year holiday on stamp duty for newly-listed UK companies last year, which was designed to encourage more firms to list on the London Stock Exchange, but it has so far failed to yield any meaninful uplift in IPOS.

Dan Neidle’s Tax Policy Associates suggested in research that the full abolition of the charge would have the largest growth effect compared to any other planned tax cuts by the government, due to the likely boost to trading levels across UK capital markets.

A Treasury spokesperson said: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”