Prior to Rishi Sunak’s holiday scheme, stamp duty cost homebuyers a total of £13 billion per year, with an estimated £3 billion in overpayments between 2015 and 2016, due to poor advice and complex rules.
According to SDLT specialists, Cornerstone Tax, stamp duty remains poorly understood by many, and with the holiday coming to an end next March, they feel more needs to be done to protect consumers from a cost that few know how to navigate. Indeed, it is not just homebuyers themselves that find the current rules confusing – Cornerstone Tax adds that many solicitors and tax advisers also struggle to make sense of existing regulations surrounding the purchase of different types of property.
Publishing the findings of its research into consumer attitudes towards stamp duty, the company found that more than 52% of Brits surveyed think an independent office needs to be set up, that audits stamp duty transactions, and ensure that homebuyers aren’t paying more than they should.
This finding comes alongside Cornerstone’s estimate that poor advice around pensions – in particular – means that around 120,000 people in the UK could be owed refunds for one of the many issues caused by Stamp Duty advice.
Further, the company adds that 36% of Brits are mistrusting of the legal sector during property transactions and have felt ripped off by solicitors when buying and selling property, and 13% feel that they were forced to pay too much stamp duty in error due to their solicitor.
Also, some 14% of Brits said they’d been forced to take out short-term loans or emergency credit to cover the cost of unexpected stamp duty payments, while 61% of homebuyers said they hadn’t even considered whether there had been a mistake in the stamp duty they paid.
Speaking on the company’s research, Cornerstone Tax principle consultant, David Hannah, stated:
“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.”