The 8 biggest challenges with Stamp Duty in 2022 and how to solve them all


As we enter the back half of the year, it’s worth noting that of all the challenges currently facing conveyancing firms, many can be traced directly or indirectly back to Stamp Duty Land Tax, which continues to be a hot topic long after the end of former Chancellor Rishi Sunak’s ‘holiday’ of 2020-21.

Here, we summarise the top ten SDLT-related challenges facing firms today.

1. Getting it Right

It may seem an obvious place to start but getting the Stamp Duty right on each individual case can be harder than some may realise.

The limitations of the HMRC online calculator, combined with the tendency of the government of the day to make additions to the legislation targeted at whatever is the current policy trend, mean that getting the SDLT on a purchase right is seldom a given for many firms.

2. Keeping it Efficient

The old adage of “you can do a job quickly OR do it right” is one that conflicts with modern conveyancing where the expectation is that you do both!

In a profession where time pressure and delaines are constant themes and the requirements of the CQS for full audit trails of each SDLT calculation your firm makes and the well-publicised lack of support and lengthy waiting times for answers from HMRC, getting the job done quickly and properly can seem an impossible challenge.

3. Making it Safe

Notwithstanding recent changes to the rules on renewal, Professional Indemnity Insurance is one of the biggest challenges facing small to medium-sized firms at this time. With policy premiums rising by over 30% in the last quarter of 2021 on average, and industry commentators seeing no great reduction any time soon, this is a very real concern.

And the increasing awareness of potential errors in SDLT cases and the concurrent rise in claims against firms is one factor driving those prices up.

4. Rise of the Claim Farm

With PPI done and dusted, there was always going to be a search for the next big claim industry that firms could set themselves up in, and Stamp Duty Land Tax has provided that opportunity.

Currently, most claims are on missed Multiple Dwellings Relief claims on historical transactions, but it’s an absolute certainty that other areas will bring claims, including Mixed Use and, following Bewley, the vexed question of whether a property was even inhabitable at the time of purchase.

Given the numerous anecdotal examples of errors in the additional dwelling surcharge and the new non-residential surcharge, one can only imagine such firms will be around, annoyingly, for years to come.

5. The 3% Surcharge

We’ve mentioned it above already, but it merits its own entry on other grounds than simply the way in which it over-complicates simple transactions. The additional pressure being placed on the BTL market by the slow erosion of tax benefits and this surcharge means that fewer landlords will be considering expanding their portfolio and fewer still will be tempted to make a first investment.

Given the size and historical strength of the BTL market and the current difficulties caused by the rising cost of living, this means potentially far fewer clients in what was already a highly competitive marketplace.

6. Another New Surcharge

As of April 2021, another addition was applied to the SDLT legislation in the form of the non-resident surcharge. This 2% addition on each band for non-UK resident purchasers will doubtless inspire less than enthused reactions from those who recall the nightmare of dealing with the various ins and outs of the last ‘surcharge’ introduced on SDLT for additional residential purchasers.

More complexity added to a process that was never simple, to begin with, means higher costs and more time spent per case.

7. An Eye on the Future

HMRC’s latest proposal on changes to SDLT rules relates to mixed-use property, a classification that they feel is being exploited artificially to benefit from the associated Stamp Duty relief. At the same time, suggestions are being considered to adjust how Multiple Dwellings Relief operates, for similar reasons.

More amendments to legislation simply means more work required to get it right, in a marketplace where the client is very aware of the potential impact of gaining or missing a relief.

8. The Cost of Living Crisis

It’s all you hear about these days, on the news, in the papers, and even (occasionally) in the current Tory Leadership debates.

The cost of living rising in unprecedented leaps means that clients are ever more careful about every aspect of what they’re doing, meaning even closer scrutiny of their SDLT bill and other costs.

Firms don’t operate in a vacuum of course, and your operating costs are likely to also rise, at a time when your clients can ill afford it and a time when you’re going to have to spend more time and effort on SDLT.

The Solution

Happily, there is a straightforward answer to meet all these challenges.

SDLT Compass is the most sophisticated and comprehensive Stamp Duty calculation tool in existence to date. Constantly updated to coincide with the latest legislative changes and with full support from a team of expert tax advisers, covered by its own PI Insurance – Not Yours – Compass is your one-stop remedy to ensure that you get SDLT right first time, every time, and avoid the above pitfalls and challenges.

"If your solicitor isn’t using it already, it might be time to change solicitors. Get in touch today!"