Budget response: SDLT cliff edge averted, but justice system is still on the brink

News the government will prevent a cliff-edge end to the stamp duty land tax (SDLT) holiday by tapering the scheme was today welcomed the Law Society of England and Wales, as it warned that investment in the justice system must not be forgotten.

Law Society president David Greene said: “We are pleased the government has taken action to avoid the stamp duty holiday cliff edge by implementing one of the solutions that we and our members put forward to the problem that ending the scheme on 31 March could cause significant disruption to both consumers and the market.

“Implementing a tapered transition from the full SDLT holiday on 30 June to the end of the scheme in September will help smooth the cliff edge and reduce the risk of a significant impact on consumers and the market.

“The digital arm of the government’s Help to Grow scheme will help small and medium-sized business adopt productivity-enhancing software, with a voucher to cover the costs of approved technology.

“Based on our research, the legal services market could see annual growth of 5 to 6% between 2019 and 2022. Technology will be a vital component of that growth and the necessary productivity increases.

“Given how critical the use of technology is to the legal services sector’s growth we hope that the government will recognise the immense potential lawtech has to drive productivity in small and medium-sized law firms by including key lawtech applications in the approved software list.

“A newly announced temporary increase to capital allowances over the next two years may encourage legal businesses to explore their options for increasing capital investment, for example in lawtech.

“We are disappointed that the government has not committed to spend any more than the £450 million pledged to the justice system at the Spending Review last year.

“Access to justice has suffered throughout the pandemic as already underfunded legal aid providers have struggled to stay afloat. The consequences of this for the integrity of the justice system cannot be over-stated.

“We urge the government to invest further in the justice system, to ensure the public can access the justice process for the issues facing them during and following the COVID-19 pandemic.

“Legal aid deserts must be ended by funding an independent review of the sustainability of the civil legal aid provider base and legal aid for early advice from a solicitor must be restored to help clear the current courts backlog.

“Legal aid practitioners must be paid properly. While the second part of the criminal legal aid review is now under way and will hopefully provide the structural increase in resources needed for the long-term sustainability of the criminal defence sector, any benefits from this are some way off.

“Our research has found more than 750 criminal legal aid firms have either closed their doors or given up practice over the past decade. The government must urgently provide criminal defence solicitors with the additional funds they so desperately need.

“With the right government interventions legal services can – and will – play a substantial role in driving the wider economic recovery from the pandemic.”

Furlough scheme

David Greene said: “The announcement that the job retention scheme has been extended until the end of September provides welcome support and clarity to law firms that have had to furlough staff during the pandemic as they plan ahead and the country emerges from lockdown.”

Stamp duty land tax holiday

“We are pleased to see the chancellor has responded to our call to take action to address the cliff-edge end to the stamp duty holiday. The announcement that the government will extend the current SDLT holiday until the end of June, with a tapering of the holiday after that until the end of September, reflects one of the options we had put to the Treasury ahead of the Budget.

“We warned that the combination of the cliff edge and a bottleneck in the property market could see thousands of transactions collapse at the last minute, leaving consumers who are currently in the process of buying a home stranded and out of pocket.

“Buyers and sellers will breathe a sigh of relief knowing that their dream moves will not fall through on 31 March.

“The offer of a reduced concession for three months after the end of the full holiday on 30 June will help to reduce the risk of a future cliff edge for consumers.

“Nonetheless, the design of the extension and tapering of the holiday could encourage consumers to begin new transactions in the expectation of benefitting from the scheme, so the government should remain vigilant to ensure fairness, stability and confidence in the market as the holiday comes to an end.”

Business grants

The Budget included a £475 million top-up for local authority discretionary grants to businesses that have been affected by the pandemic.

David Greene said: “Many law firms, especially small high street practitioners, have been hit hard by the lockdown restrictions even though they have not been required to close their doors.

“Local authority discretionary grants provide a lifeline for many, but we had concerns that some law firms were not getting the support they needed due to limited supply and misguided perceptions that law firms have not been as hard hit as other sectors.

“We are pleased that the government has taken up our recommendation to increase the pot of money available for businesses through the discretionary grant scheme.

“The government should now go further and engage with local authorities through guidance to ensure that applications from law firms (including sole practitioners) are fully considered.”

Corporation tax

The current UK corporation tax rate of 19% was expected to fall to 17% until Rishi Sunak decided against that in his first Budget in 2020. It will now rise from 19% to 25% on companies’ profits from April 2023, but this rate will be reduced for businesses with profits below £250,000.

The government’s triple tax lock promised not to raise tax rates and covers the three biggest revenue raising taxes: income tax, National Insurance and VAT. But corporation tax rates were not covered by that promise and it is the next largest source of tax revenue.

The corporation tax rise will affect law firms and other businesses that are incorporated as limited companies.

“For the next two years, businesses will welcome announcements of a new temporary increase to capital allowances as well as increased flexibility to carry losses back to set against profits in previous years,” said David Greene.

Tax Day

The government will be publishing a series of tax-related consultations and calls for evidence on Tax Day – 23 March – that would usually be published with the Budget.

David Greene said: “We expect consultations about the future of tax administration in the UK, as well as an interim report on the government’s review of business rates.

“Solicitors and others watching out for some of the longer-term proposals traditionally signalled through the publication of consultations on Budget day must exercise extra patience this year.”

Business rates review

David Greene said: “The government is currently undertaking a fundamental review of the business rates system. We expect an interim report, including a summary of responses to a call for evidence from last year, to be published on Tax Day and a final report in Autumn 2021.

“In the shorter term, we know from last year’s Spending Review that the government’s plans to freeze the business rates multiplier in 2021-22. The government estimates that this will save businesses in England around £600 million over the next five years.”


All financial systems are supported by legal infrastructure and in the UK the legal and financial sectors are closely intertwined. The delivery of financial services, whether through traditional means or through technology, often depends on the delivery of legal services,” said David Greene.

“We welcome the publication of the pioneering Kalifa review on fintech, and would encourage policy-makers to deliver support to both the lawtech and fintech sectors as the success and growth of one is dependent on the success and growth of the other.”

Notes to editors

Read the Budget 2021 in full

Read our submission to HM Treasury

Read more about our SDLT campaign

Figures on criminal legal aid firms from our Justice on Trial 2019 report

About the Law Society

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Press office contact: Naomi Jeffreys | 020 8049 3928

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