Multiple Dwellings Relief to reduce SDLT – Am I eligible and how do I claim it?
In a major relief move to first-time home buyers, the HMRC has stated that they might be able to claim the Multiple Dwelling Relief if they have more than one property. In this article, we discuss what the relief from Stamp Duty Land Tax (SDLT) is all about and the eligibility criteria for it. Let’s get started.
A dwelling can be any place of residence such as a house, flat, cottage, etc.
What is the Multiple Dwelling Relief for SDLT all about?
As the name suggests, the Multiple Dwelling Relief for SDLT is given to homeowners who purchase more than one ‘dwelling’ in a single transaction. In this scenario, the SDLT rates are applied to the average value of all the properties purchased in that transaction, and not the total amount it costs the buyer.
However, in ‘linked transaction’ cases, the purchase of a single dwelling will be eligible for the Multiple Dwelling Relief as well.
What is the meaning of a ‘linked transaction’ in SDLT?
A ‘linked transaction’ occurs when a buyer purchases multiple properties from the same seller. The Stamp Duty Land Tax fee for linked transactions is applied collectively on all the properties that qualify for the linked transaction. As a result, the collective tax applied will be quite higher in comparison to the purchase of individual properties.
Do note, in this case, it falls under Multiple Dwelling Relief. So, an average price of all the properties is calculated and then taxed accordingly.
Some things worth noting are:
Multiple Dwelling Relief is not applicable if the property lease is over 21 years old. Hence, the normal tax rates will be applied. If you reduce the number of properties you own within three years of the linked transaction.
Homeowners that own dwellings prior to purchases that fall under the linked transaction category must pay an additional 3% surcharge on the SDLT. This rule does not apply to mixed-use properties.
Is an annexe eligible for Multiple Dwelling Relief?
Whether an annexe is eligible for the Multiple Dwelling Relief or not depends on what it is being used for. It is dependent on whether the annexe is considered a separate property. An annexe or outbuilding that is self-contained may be regarded as an independent dwelling; however, this is not always the case.
According to several court rulings, it always depends on the circumstances. Let us take a look at the David Merchant and Sarah Gater vs HMRC case.
Here, the annexe did have its physical elements that could give it the classification of being a separate property. However, the annexe did not possess its own electricity or gas metres. What’s more, it did not even possess its own postal address or council tax billing.
If you need to contact your Stamp Duty Land Tax, you need to speak to your agent once you apply for the Multiple Dwelling Relief. They will submit your assessment to the HMRC on your behalf and then wait for a response from them.
Any questions? Request a callback from our experts.
See how dns can help
Our team comprises Chartered Tax Advisers with many years’ experience in the industry, former property lawyers, accountants, and financial advisers. you can be assured that our advice comes with the best available seal of quality and expertise. Give us a call today on 020 3500 2646 or WhatsApp 07739339635 to speak to our advisors, we'll find the right accounts & tax solution for you.
Award winning experts
trusted by many
We're proud of our clients and their success. Find out more about them and
the help and support we provide.
Software we use
We use wide variety of softwares to manage your accounting and bookkeeping.
Book a Free Consultation
Get in Touch
Consult our chartered tax advisor. Whether you’re a buy-to-let landlord, individual landlord, corporate landlord, property dealer, estate management, non resident investors, or a second home owner, we have packages and services to suit your every landlord and property need.
dns property tax services
DNS House, 382 Kenton Road,
Harrow, Middlesex, HA3 8DP