Retail investors dump UK stock as two-thirds cite CGT hikes

The popularity of UK assets among domestic investors has soured significantly, with Britons now favouring the US as the go-to market for their money, research suggests.

Having shared top spot with the US just last year, the UK is now just the fourth most favoured investing location for domestic retail investors, according to a poll of investors conducted by wealth manager Charles Schwab.

Almost three quarters of investors said the US is a good market to invest in, an increase of six per cent from a year ago.

Meanwhile, 63 per cent said the same of the UK. Last year, 66 per cent said the UK market was a good place to invest, joint with the US and Japan.

Older generations in particular are falling out of love with UK investments, with just 55 per cent of Baby Boomer and Generation X investors favouring the UK, down 9 per cent year-on-year and compared to 73 per cent of Generation Z.

Respondents cited changes made to capital gains tax in the Autumn Budget under the new Labour government.

Six in 10 of all investors said they are less inclined to invest in the UK market following the changes.

The Autumn Budget saw the lower rate of capital gains tax for basic rate taxpayers increased from 10 per cent to 18 per cent, while the higher rate was hiked from 20 per cent to 24 per cent.

While CGT rates appear to be weighing on all investors, 72 per cent of Gen Z still said UK-based investing is more attractive after the election, compared to just 298 per cent of Boomer investors.

Richard Flynn, UK managing director at Charles Schwab, said: 'Our latest research shows a significant shift in sentiment, particularly among older investors, who are becoming more sceptical about the UK's investment outlook.'

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As investors fall out of love with the UK, the US has become an increasingly popular destination for investors' money.

Over the past six years, Charles Schwab said, interest in investing in the US has grown 20 per cent, having previously stood at 52 per cent.

In 2025, almost half of investors, 45 per cent, expect US equities to grow over the next six months, while just 33 per cent think the same about the UK.

Flynn said: 'Despite recent market volatility in the US, UK investors continue to look beyond their home market, with the US emerging as the preferred destination for delivering long-term returns and value.

'While short-term fluctuations may persist, nearly three-quarters of retail investors still view the US as a strong market to invest in, reinforcing confidence in its potential to generate attractive opportunities over the long run.'

There is also growing appetite for investing in China, where 58 per cent of those polled said they should offered good investment opportunities.

Some 48 per cent of UK investors think Chinese equities will post strong returns and 39 per cent see long-term value.

The trend towards China is particularly visible among younger investors, with Gen Z and millennials 18 per cent more likely to invest in China, as well as 19 per cent more likely to invest in Europe, in comparison with older investors.