Many of us aren’t going to worry about the government’s latest hike in Stamp Duty rates (as from 6 April it’s now 5% on house purchases over £1 million) – BUT it doesn’t look like there’s much for home-buyers too look forward to either.
While house prices may be falling in some areas, in London they’re still rising!
“Isn’t there something I can do to get out of paying Stamp Duty?”
Ok, if you can find somewhere for under £125, 000, you won’t have to give the Revenue anything. And if you manage to qualify as a first-time buyer then you can go up to £250, 000 without having to pay stamp duty at all. But for everyone else, you’ll have to pay, and the rates go from 1% for prices up to £250k then 3% up to £500k increasing by a further 1% for each subsequent £250k up to £1m.
Many buyers ( e.g. those in London and the home counties) are looking at having to pay at least 3% duty on the purchase price in stamp duty, which equates to £7, 500+ minimum. It’s not surprising that residential Conveyancing Solicitors are getting more and more enquiries about stamp duty savings schemes, including from those higher–end purchasers who have to pay £50, 000+ on a £1m+ house.
For a change of ownership to be registered at the land registry, the buyer’s Solicitor will have to produce a certificate that any Duty has been paid. Buyers therefore have little scope for avoiding the tax.
Traditionally, Conveyancing Solicitors have been reluctant to assist with any proposals for schemes to avoid or reduce stamp duty liability; they are usually seen as unlikely to succeed. Conveyancing Solicitors are unlikely to be tax experts, and so they’ll probably not feel confident to truthfully advise as to whether any scheme can be relied upon. At the end of the day, it’s doubtful that most of these schemes will assist ‘the average home-buyer’, particularly one requiring a mortgage from a high-street lender.
Solicitors will also be worried that if they are party to a tax-avoidance scheme, they themselves could be subject to penalties, in addition to anything their clients would have to pay.
In my opinion, buyers and Conveyancing Solicitors must continue to be very suspicious of any such schemes. If the government really wants to do anything to assist the property market, it needs to look at stamp duty and bring in a fairer scheme.