All Buyers

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Everyone is going to be paying at least £2,500 less on their Stamp Duty.

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The raising of the zero tax band on SDLT to £250,000 means that everyone’s purchase is set to get a bit cheaper. While that may be great news for them, it’s likely to be a nightmare for you as their lawyer.

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Many buyers were already delaying their purchase prior to the announcement, waiting to see what it might mean for them. Once the announcement was made, and listed as effective immediately, they wanted to get moving.

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Not only that, but other buyers who’d had reports and Stamp Duty Returns sent to them now require those Returns to be re-done reflecting the new bandings.

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All this was made significantly potentially riskier by the fact that in spite of the changes being effective immediately, HMRC’s calculator was unadjusted. Because why wouldn’t you want your life to be made more difficult?

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First Time Buyers

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First Time Buyers got an even bigger helping hand on paper, with the FTB zero tax threshold rising to £425,000 for First Time Buyers purchasing property worth up to £625,000.

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We say on paper, because with the average house price still at around £250,000, and First Time Buyers usually being younger with lower income and smaller deposits, it seems unlikely that a great many will be hugely impacted by this change.

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Of course, the average starter home price in Metropolitan areas is considerably higher and First Time Buyers will benefit from the increase in the threshold to £425,000 by up to £8,750

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From your point of view then, whereas there may be a few FTB clients who will require re-worked Stamp Duty returns as a result of this change, outside the Metropolis, most will simply be unaffected by it.

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Investment Clients

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If you have clients with an investment portfolio you may see their purchasing slow down as the full implications of the budget changes hit them.

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With the 3% Surcharge still in effect, such purchasers stand to be significantly disadvantaged in terms of tax burden on purchases compared to standard residential buyers by £7,500 on a £250,000 property.

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For firms with many investment clients, these changes may spell a lasting negative impact on your income stream.

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Mixed Use

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Identifying a  property as Mixed Use will now only see clients ‘breaking even’ on properties of £925,000 or more for owner occupiers but the fact that Mixed Used properties do not attract any surcharges  will significantly impact investors and second home purchasers as the embedded disadvantage rises to £27,750 at this level.

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Clearly and accurately identifying who and what is, and isn’t, liable to surcharge will be a significant risk for firms on all prices up to, and beyond this price level.

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The Bottom Line

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HMRC’s sluggishness off the line in adjusting its own calculator (currently unavailable to even use at the time of writing) left firms slightly in the lurch when combined with sweeping changes set to take place immediately they were announced.

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Fortunately, SDLT Compass clients were seamlessly protected from any such impact.

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Compass was fully updated in line with the new changes within hours of the announcement being made, minimising disruption to firms who had a lot of adjustments to make on behalf of their clients.

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It really goes to prove the efficiency of Compass as a system, and how it can help avoid the dangers of over reliance on systems never guaranteed to be accurate or up to date.