Changes in SDLT mixed-use buildings by HMRC

HMRC’s guidance on transactions involving mixed purchase has undergone a recent amendment, stating that Stamp Duty Land Tax (SDLT) liability could be reduced on a mixed purchase transaction involving more than one residential property.  

HMRC introduced the higher rates of SDLT to be applied to additional residential properties like second homes and buy-to-let properties on 1 April 2016. When an individual purchases a mixed-use building with both non-residential and residential properties, they would normally pay the non-residential rates of SDLT or can make a claim for Multiple Dwelling Relief (MDR) if the trasanction involves more than one residential property.

Earlier, HMRC’s position was that higher rates of SDLT (additional 3% rate) should be applied when claiming MDR. but this has been amended now and the guidance states the normal rates of SDLT can be applied if the non-residential element is not negligible or artificially contrived.

The guideline available in HMRC’s manual SDLTM09740 on this matter was updated on November 13th, 2020. It is clear from the new guidance that the view of HMRC has changed significantly on the matter and the 3% surcharge will not be applicable to the dwelling part where MDR is claimed.

Because of this change, affected buyers could claim any overpaid SDLT from HMRC on non-residential or mixed-use buildings within the legal period of time. The guidance of HMRC also recommends buyers to go for a non-statutory clearance application if there is any uncertainty regarding a transaction.

Taxpayers with mixed purchases who claimed MDR and paid SDLT at the higher rates could claim a refund. In the same vein, if you did not make a claim for this particular relief because the effective rates would have increased by using the higher rates, you might be able to get a refund.

You can make this claim within twelve months of SDLT return’s due date, which was filed for the mixed purchase. Taxpayers could also consider going back three years, but this may be at the discretion of HMRC for practical purposes.


This clarification will be able to help purchasers assess SDLT on the purchase of mixed-use properties correctly and figure out whether or not it will be beneficial to make a claim for MDR. There will naturally be cases where MDR has been claimed, yet SDLT assessment has taken place at higher rates for the dwelling part of the transaction. Taxpayers might also be able to claim the overpayment, in this case, using the overpayment relief. Moreover, this relief can be considered for the past four years..

As a Professional Property Tax Accountants, We recommend taxpayers to review their mixed purchases over the previous four years, excluding the ones where they purposely built the dwellings for student accommodation. Consider prioritising the dwellings that were purchased in the previous year and claim them before the due date of the return. Checking these purchases will also allow you to check if you have overpaid SDLT previously.

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