Stamp duty is a tax that – prior to the holiday – costs homebuyers £13 billion a year collectively. It has been estimated that over £3 billion worth of stamp duty was overpaid in 2015/16 due to mistakes in advice and confusing and complex rules.
Stamp duty is a tax poorly understood. The holiday is due to come to an end in March with the complexities of stamp duty land tax no clearer. The tax is not just complex for homebuyers, but often the solicitors and tax advisers employed to make sense of the rules and regulations surrounding the purchase of various types of property.
Research from Cornerstone Tax has shown that 52% of Brits feel there should be an independent office set up that audits stamp duty transactions to ensure people pay the right amount and not too much. This is alongside the fact that Cornerstone Tax estimates that mistakes in advice around pensions specifically mean that around 120,000 people in the UK could be owed refunds for just one of the many issues with Stamp Duty advice.
New nationally representative research conducted by Stamp Duty specialists Cornerstone Tax, examines the sentiments of the UK’s homebuyers on a confusing tax and what they feel could be done to help.
- 52% of Brits feel there should be an independent office set up that audits stamp duty transactions to ensure people pay the right amount and not too much – 18,456,000 people
- 36% of Brits are mistrusting of the legal sector during property transaction and have felt ripped off by solicitors when buying and selling property – 9,608,000 people
- 13% of Brits say that as a homebuyer, they feel that they were forced to pay too much stamp duty in error due to their solicitor – 2,693,000 people
- 14% of Brits have been forced to take out short-term loans or emergency credit to cover the cost of unexpected stamp duty payments – 1,926,000 people
- 61% of homebuyers said that they have never even considered whether there was a mistake in the stamp duty they paid – 15,003,000 people
David Hannah, principle consultant and founder of Cornerstone Tax, explains:
“This research demonstrates a lack of clarity in and around stamp duty land tax, both by the public and by the legal sector. With millions of properties giving access to infrastructure companies, having shared outdoor space or premises for commercial use, solicitors have a duty of care to inform their customers of all potential stamp duty reductions.
The mistakes being made are in almost all cases totally unintentional and otherwise made in fear of underpaying. Most legal professionals are ill-equipped to navigate the complex rules around it and need help.
The law around SDLT is incredibly complex and many advisors who help homebuyers evaluate how much they should pay are trained only to differentiate between residential and commercial property.
They simply aren’t familiar with the intricacies of the law’s evaluation criteria, which has led to many being mis-advised unintentionally. There are a number of other reasons why people have overpaid; it’s not always a misinterpretation of the 3% surcharge.”