On the surface there were few surprises. The probability of an increase in stamp duty was signalled in The Lawyer three weeks ago. Changes to tax credits on dividends paid to pension funds were widely expected, as was the likelihood of an adjustment in advanced corporation tax (ACT).
In the property sector, lawyers expressed relief that the increase in stamp duty was not as high as anticipated. In mid-June, fears of a large rise became so pronounced that Law Society vice-president Phillip Sycamore wrote to Chancellor Gordon Brown, noting that “proposals to increase stamp duty will be viewed with alarm by our clients across the board”.
In response to the budget, Sycamore commented: “I don't see it as disappointing. The increases are limited to higher value properties so it won't affect the ordinary house buyer.”
Jeffrey Freed, a conveyancing partner at Freed Kemp Rapport in Cardiff, suspects the progressive loading on higher value properties is a means of raising tax in a way most voters will not notice. “It will slow down development in commercial property. The commercial sector doesn't take a knock of 1 per cent easily. But Brown seems to have omitted mentioning the commercial market.”
Mark Joscelyne, a partner at Olswang, feels there may have been a similar strategy in the abolition of foreign income dividends on ACT. “It's really an additional tax,” he said, adding that lawyers will be under pressure to devise ways around it.
In respect of the scrapping of the tax credit on dividends paid to pension funds, Jonathan Seres, senior partner at Sacker & Partners, commented: “It cannot be good for pensions, although lawyers will be kept busy.”