Autumn Statement 2014 series: Don’t destabilise the legal sector
November 24, 2014
Over the last 12 months we’ve seen signs that the legal sector is acclimatising again after the seismic upheaval of recent years caused by the general economic downturn, Legal Services Act, LASPO, and legal aid funding.
The austerity measures and the resulting cuts to legal aid budgets have hit criminal and matrimonial lawyers, and barristers have also been significantly affected.
There has also been change driven by tax legislation. In Budget 2014 we saw measures introduced to effectively outlaw the self-employed status of fixed share or salaried partners, and to take away the tax advantage of running LLPs with limited company members which has resulted in a lot of firms being distracted by having to look at their company structure, remuneration and employment policies.
There has been an increased tax burden on professional firms as a whole, so my message to the chancellor ahead of this Autumn Statement is ‘don’t rock the boat’ with any more changes to the rules on business tax structures.
Smaller practices are already dealing with the additional costs associated with changes to payroll rules and the introduction of auto-enrolment pension legislation.
On the upside, business in certain parts of the legal sector has picked up markedly. Corporate and commercial lawyers are benefiting from an increase in transactional work. Anything the chancellor can do to encourage more investment by business owners and an increase in M&A activity would be a big plus.
Property work has also picked up really well and most of my clients that deal with commercial property have been busy recruiting. Residential conveyancing has also been doing better than it has been in recent years, though there is a capacity issue at the moment because a lot of firms no longer have the staff to service the work.
I would like to see a change to stamp duty rates and thresholds to keep the momentum going in the housing market. Anything that could be done to give tax breaks for those operating in the rental market too would also be welcome.
Karen Hain is a partner and head of the professional practices team at Chiks.