Almost every single person looking to work out how much Stamp Duty Land Tax (SDLT) applies to a purchase has turned to the online SDLT calculator since the tax was introduced nearly two decades ago.
Consequently, this SDLT calculator has served as the benchmark for buyers, estate agents, mortgage brokers, and solicitors.
But how accurate is the calculator? How much should you be relying on it and what happens if it gets it wrong?
Complexities of SDLT
First, the obvious: SDLT is complex. It is subject to near constant tinkering by the government of the day, usually in service of some policy goal or other, from encouraging investment purchasers (MDR) to discouraging investment purchasers (HRAD) to trying to stimulate the market in the middle of a pandemic by cutting it altogether on purchases up to £500,000.
As a result, that complexity means that any attempt to develop a calculator would be a Herculean task – requiring thousands of hours of investment and a complex algorithmic engine able to differentiate between dozens of different scenarios and regularly updated to take account of the latest changes.
The concern: the HMRC SDLT Calculator
HMRC’s calculator… isn’t that engine. It’s basic, asking a series of simplified questions and leaving out various nuances and details which might impact the final SDLT liability on a purchase. It is, at best, an estimate.
Read our blog on Today’s Conveyancer – 5 ways Compass improves on HMRC’s stamp duty calculator!
Don’t take our word for it – in 2018 when answering queries posed to it on the calculator by a broadsheet newspaper, HMRC’s own spokesperson said that the calculator was intended merely as “a guide” rather than a final arbiter of the SDLT due.
While it may be tempting to dismiss this as mere semantics, there is ample evidence that this matters. Claims against firms for MDR have shot up exponentially in the last eighteen months.
Rising PII Claims
Mixed-use claims are rising.
Crucially, we are yet to see the full impact of the confusion around HRAD when it was introduced in 2016, which also persists to this day. But anecdotal evidence suggests that a number of firms were making errors which may have cost or stand to cost their clients thousands of pounds.
As if that were not enough, consider that the cost of PII cover is rising significantly – more than 30% on average in the last quarter. It is becoming more and more expensive to keep small to medium-sized firms in operation, and that’s a trend which is only continuing in one direction.
Moreover, add in the SRA’s intention to raise the maximum amount of fines it can levy against firms and the Law Society’s CQS requirements on SDLT and the auditing required, and the costs of using a calculator intended to give you only a rough estimate start to shift into sharp focus.
The solution?
Compass is the difference maker that your firm needs. Firstly, it is built by a team of experts over a course of several years. Secondly, it is constantly monitored and updated in line with the latest developments. Therefore, Compass will guide you to the right answer first time, every time.
This article was submitted to be published by SDLT Compass as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.
