What is Multiple Dwellings Relief?

Stamp Duty Land Tax (SDLT) is a tax on any purchase of a property in England and Northern Ireland. There are some exemptions and reduced rates for this tax, and one such relief is Multiple Dwellings Relief or “MDR” – a reduction in SDLT if there is more than one dwelling in the purchase.

The calculation of the SDLT rates on multiple dwelling purchases, and what constitutes a ‘single dwelling’, are complex and best handled by an experienced tax lawyer.

In some cases, buyers are misled by advisers into claiming Multiple Dwellings Relief, in their SDLT return and they could then face an investigation from HMRC for tax avoidance or even tax evasion. On the other hand, buyers may discover that they were eligible for Multiple Dwellings Relief from SDLT only after their purchase, and seek to claim back their tax payment from HMRC.

If you are seeking advice on claiming Multiple Dwellings Relief, contact Patrick Cannon using the form on this page.

What Is the definition of a “Dwelling” for MDR?

The Finance Act 2003 Schedule 6B gives this definition: ‘A building or part of a building counts as a dwelling if—

(a) it is used or suitable for use as a single dwelling, or
(b) it is in the process of being constructed or adapted for such use.’

Factors that are not clearly defined include: whether the dwellings must-have kitchen facilities, lockable connecting doors or separate utility metering. These variables can be relevant in claiming SDLT relief, or in defending your MDR claim to HMRC.

When Does Multiple Dwellings Relief Apply?

Multiple Dwellings Relief can apply to the purchase of two or more dwellings in a single transaction, or in a series of linked transactions.

This can represent significant tax savings if you are buying several properties at the same time, one large property that is divided into dwellings or a house with a granny annexe, for example. It can also save money for landlords buying properties ‘off plan’.

What is a ‘linked’ Transaction Under SDLT?

A ‘linked’ transaction is one where a number of property transactions are carried out between the same buyer and seller (or persons connected with them).

Buyers should be aware that the value of all properties in a series of linked transactions is normally added together before the rate of SDLT is applied, carrying a potentially higher rate of tax than on the individual properties.

However, Multiple Dwellings Relief applies to ‘linked transaction’ properties to reduce the tax charged by taking the average price of each dwelling and only charging the rates applicable to that average price, representing legitimate SDLT savings for the buyer.

What is the 3% SDLT Surcharge?

If you are already a homeowner, there is a 3% SDLT surcharge on each additional residential property that you buy. Exceptions include buying a home to replace a current home (for example during a separation or divorce).

If the additional residential properties have a commercial element (eg flats above shops or residential properties with offices), they are exempt from the 3% SDLT surcharge.

How can Multiple Dwellings Relief be claimed for SDLT?

A conveyancing solicitor or property accountant will calculate your SDLT after applying for Multiple Dwellings Relief and make the claim within the land transaction return.

If you are claiming MDR after the purchase of the property, you will need to make an SDLT refund claim to HMRC within 12 months of the purchase.

How Patrick Cannon can help

Stamp Duty Land Tax is a very complicated area. If you are considering whether the 3% higher rates of SDLT apply or whether you can claim multiple-dwellings relief, contact Patrick Cannon below to ensure you don’t miss out on any possible relief.

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Instruct Patrick Cannon directly without having to employ the services of a solicitor or an accountant. This means you can focus your finances on one specialist lawyer who will own your case from beginning to completion with in-depth experience in tax and financial crime cases, including tax avoidance schemes, GAAR and enabler penalties, Civil and Criminal tax investigations, Stamp Duty Land Tax, Offshore disclosure and money laundering.

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