Budget 2017 - lawyers' reactions to announcements on Stamp Duty, digital infrastructure and more.

Budget 2017 - lawyers' reactions to announcements on Stamp Duty, digital infrastructure and more.

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Author: Kara Shadbolt

The chancellor told us to expect a budget of "change, challenges and opportunities" and so a raft of measures and pledges - from greater investment in digital infrastructure to the abolition of stamp duty for most first time buyers have been announced.

See below for what our lawyers made of the news.

Digital infrastructure - £500m of additional investment into 5G, fibre broadband and artificial intelligence

Craig Armstrong, commercial partner, said: "Today's budget announcement of £500m of additional investment into 5G, fibre broadband and artificial intelligence research is a positive step to placing the UK in a strong position within the technology sector. However, further steps need to be taken to ensure that the UK is able to attract the best global technology sector talent.

"As we have previously advocated, to secure a stronger future for the UK's thriving tech sector in a post-Brexit world, investment should be made to ensure there are less barriers for hiring global talent, in addition to more funding dedicated to education and graduate jobs within the tech sectors.

"Red tape can also inhibit growth, particularly within the start-up space, and it will be interesting to see how the regulatory's pioneer fund will be implemented to promote innovation and challenge the established technology behemoths, such as Google, Amazon, Facebook and Apple."

Laura Harper, commercial IP partner, said: "The chancellor's announcement of an investment of £500 million in a range of technological initiatives ranging from artificial intelligence, to 5G and full fibre broadband should help support high growth, high productivity businesses in the North West region and beyond.

"The promise of a further £2.3 billion allocated for investment in research and development and the main R&D tax credit increased to 12 per cent is also welcome and will help bring the UK's investment in its science and technology sectors more in line with some of our main global competitors.

"The £30m set aside to trial new solutions on the TransPennine route to improve mobile and digital connectivity on trains, adds significant weight to the Government's pledge to level north/south economic disparity and boost connectivity. However, further clarity is needed on the news of the £1.7 billion Transforming Cities fund, including the precise level and nature of investment that cities in the region will be allocated and how they will benefit. This is important in assuring the region that it remains a Northern powerhouse priority."

Stamp duty announcement for first time buyers

David Parton, partner and head of Shoosmiths' conveyancing department, said: "Our conveyancing department is pleased to welcome the implementation of stamp duty land tax relief for first time buyers. With effect from one minute past midnight, any first time buyer completing the purchase of their first home may now save up to £5,000 on a purchase up to £300,000, with the average first time buyer predicted to save £1,700. For first time buyers acquiring up to £300,000 no stamp duty payment will now fall due.

"For first time buyers typically in the south east who buy for over £300,000 up to £500,000 they will now save £5,000 on the stamp duty they would otherwise have paid but will have to make a reduced payment. For example, a first time buyer acquiring for £400,000 will now pay £5,000 in stamp duty Land Tax which would have been £10,000 up to midnight on 21 November.

"The benefit will apply to all residential properties whether buying a house or a flat and only to first time buyers. Whilst the details of the scheme have yet to be published for joint buyers, both buyers will need to be first time buyers. So for example, for a couple where only one party is a first time buyer they will not qualify for the relief.

"For transactions which we are already handling, we will need to establish by a simple questionnaire as to whether our clients qualify for the relief.

"This now means that we have four different rates for the purchase of residential property depending upon from whether the purchase is either by a first time buyer; a home mover; a second home/buy to let investor; to a purchase by a limited company where the highest rates apply. This does make the process rather more complex for our Conveyancers interpreting the rules for our clients but we nevertheless greatly welcome this relief to the class of buyer we believe to be most in need of help. This complements existing help to first time buyers, through schemes such as Help to Buy and the associated government savings schemes."

However, Edinburgh real estate partner Robin Mitchell said it was a "watch with interest" move in Scotland.

"The main talking point in the Scottish property market will be on a measure which does not directly affect Scotland, namely the exemption from SDLT for first time buyers of properties up to £300,000, and reduced tax for such purchases between £300,000 and £500,000.

"A first time buyer in Scotland can expect to pay £4,600 of Land and Buildings Transaction Tax on a £300,000 property and £23,350 on a £500,000 property, compared with new figures of £0 and £10,000 respectively in England, Wales and Northern Ireland.

"The move, intended to make home ownership more affordable, will be watched with interest in Scotland, and we await with interest the Scottish Government's confirmation as to whether they intend to take similar measures to ease first time buyers' entry into the property market north of the border."

£44bn funding to boost new housing

Kathryn Jump, planning partner, said: "The chancellor's announcement of an extra £44bn funding to boost the delivery of housing to 300,000 a year by the mid 2020's will be welcomed across the industry and is a significant increase on the current annual number of new homes built. The study to be commissioned into land banking and how to discourage this practice is received with caution and housebuilders will be warily awaiting the results due next spring with the hope that any measures put in place will have gone through rigorous consultations with the industry to ensure they do not have a detrimental effect on delivering housing."

Changes to VCT rules

Tom Wilde, tax partner said: "As widely anticipated, a number of changes have been made to the tax-advantaged venture capital regimes in today's Budget. This includes a new "risk to capital condition" which is a new principles based test with the aim of ensuring that the schemes can no longer be used for investments that are low risk or have capital preservation at their core. Whilst we support such a test, the risk with all such conditions is if they are interpreted far more widely than intended and catch genuine high-risk businesses. There is also a tightening up of a number of the internal conditions which VCTs have to meet which could present challenges for some VCTs, and a new rule which will prevent VCTs investing in secured loans.

"However, there are some changes which are undoubtedly positive. These include increasing the amount an individual can invest under EIS each year; increasing the amount a "knowledge-intensive company" can receive per year; and giving greater flexibility for "knowledge-intensive" companies over how the maximum age limit (commonly known as the 10 year rule) is applied.

"All in all, whilst this will present further challenges for some investors in the tax-advantaged venture capital space, it is certainly not the doom and gloom that some were predicting a few months ago, which is testament to the excellent work that has been done by professional bodies and others in putting forward the case for such investment to the government."

Transport and infrastructure

Martin Fleetwood, transport and infrastructure corporate partner, comments: "It is encouraging to see that extra funding is being provided to encourage the move towards electric cars and reduced pollution at point of use. The challenge for all new homes to be built with the right cables for electric car charge points is good, but more could be done to support the installation of such points in existing homes, which will continue to support the majority of electric cars. Grants currently cover only part of the cost of installation of the charging point and charging can be much slower if the right cables are not present at the house.

"Additional funding for devolution deals means that city regions will be able to bring forward a number of their schemes, including transport ones. The confirmed funding for new rolling stock on the Tyne & Wear Metro is most welcome. However, there are still significant funding gaps which will continue to hold back some of the major transport projects and city regions will need to consider where transport projects can benefit connectivity, the environment and the wider community.

"The introduction of a railcard for those aged 26-30 was trailed pre-budget but is still a helpful addition. It will, however, be interesting to see what the restrictions are on its use and whether better benefits can be obtained through some of the other railcards which are available already.

"Overall, no big shocks, but at least a few coins found from down the back of the sofa."

More on infrastructure and the Northern Powerhouse agenda

Paul Stokey, head of office for Shoosmiths Leeds added: "Infrastructure investment and strong transport links to increase mobility and ensure talent can be drawn from all corners of the North is essential to the success of businesses based here; it has certainly played a central role for Shoosmiths Leeds during our first 12 months of operation.

"Therefore, having greater clarity around the level and nature of investment that cities in the region will be allocated from the £1.7 billion Transforming Cities fund is exceedingly important in assuring the region that it remains a Northern Powerhouse priority.

"We are pleased to hear the announcement of £30m to trial new solutions on the TransPennine route to improve mobile and digital connectivity on trains, adding some credence to the government's pledge to level North/South economic disparity and boost connectivity. However, this is a drop in the ocean and more must be pledged to ensure the region's continued prosperity.

"We now hope that Monday's Industrial Strategy White Paper will add further momentum to the Northern Powerhouse agenda."