Last week’s budget was a mixed bag for solicitors.
Many solicitors work well beyond conventional retirement age. The reduced rate of capital gains tax announced in the budget – in April the higher rate will be cut from 28% to 20% and the basic rate from 18% to 10% – may encourage solicitors close to retirement age, or those who have already reached it, to dispose of capital such as business premises, which may in turn encourage succession planning in firms.
Making disposal of capital assets less punitive should see an increase in transactions generally, helping firms increase turnover. The introduction of reduced rates of stamp duty land tax (SDLT) for non-residential and mixed-use property, in force from 17 March, should be a further boost to transactions as investors are encouraged to buy commercial property.
However, the confirmation of increased rates of SDLT for ‘buy-to-let’ property, which led to an acceleration in the residential property market in the run-up to the 1 April introduction of the higher rates, is now likely to see new residential conveyancing matters tail off.
As the ‘buy-to-let’ route to future income is less attractive, solicitors and clients will welcome other ways of planning for retirement such as the lifetime Isa for under-40s.
Law firms should keep an eye on and invest in the north of England. Mr Osborne’s ‘northern powerhouse’ brand had another outing with announcements about the less than expected hike in insurance premium tax going towards flood defences and plans for road schemes, railway improvements and even exploration of a tunnel under the Pennines. However, with better transport links it may be the north heading south rather than vice versa.
It was announced there would be devolution of criminal justice. Greater Manchester is the testing ground, with certain powers being devolved locally, as announced in the last few autumn statements, such as planning and some health and social care. ‘Devo-Manc’, as it is becoming known, is about moving as many powers as possible to Manchester as long as those powers are under an elected official or body. Devolution of criminal justice to Manchester is therefore unlikely to happen before 2017 when the city elects its first mayor. This devolution is likely more about services around criminal justice (for instance initiatives for reoffenders) than the law itself. What this will mean for solicitors in the region will become clearer as it happens. It is likely that slightly different systems will take shape in Manchester, and there will be opportunities to trial more innovative programmes in the region, which would be difficult to trial nationwide.
Osborne made it clear there are clouds on the horizon for the economy nationally, and for solicitors he has thrown in some of his own making. For example, an exploration of options regarding the Land Registry and issues of public or private ownership, or both, continue to loom.
There was a clear statement by the government that it will launch a consultation shortly on ‘how to reduce regulatory barriers so that new providers can provide legal services’. This consultation, alongside the Competition and Markets Authority study of the legal services market, will have far-reaching implications for the profession.
Client trust is central to every solicitor’s work and consumer protection is vital. The government recognises this and it is to be hoped that one outcome of the consultations will be that currently unregulated providers of legal services become subject to minimum regulatory requirements, protecting customers and bringing all providers to a minimum standard.
It is likely that new providers will enter the market as it opens up, so solicitors’ businesses will also face new challenges and competitors. Innovation and agility will be key to our success in this evolving environment. On these important issues the Law Society is already showing leadership and must continue to do so.
Gary Rycroft is chair of the Law Society’s Private Client Division advisory committe