What is classed as a dwelling?

The term ‘dwelling’ typically describes a residential structure in which a single household resides, such as a house or apartment. It encompasses the associated land, such as a garden, as well as land that adds value to the dwelling, like a detached garage within a housing complex.

The types of properties that can be claimed under multiple dwellings relief include:

• Houses, apartments or flats bought together.
• A self-contained annex purchased with a house.
• Mixed-use property (e.g. a shop with a flat above).

What is a linked transaction?

A linked transaction refers to multiple property transactions that occur between the same buyer and seller. This can also include the transfer of a personally held property portfolio into a limited company. In such cases, the Stamp Duty Land Tax is calculated based on the combined value of all the properties involved in the linked transaction. This means that the tax rate may be higher compared to that of an individual property. However, Multiple Dwellings Relief (MDR) can be applied, and the tax rate is determined based on the average price of the dwellings involved.

When does multiple dwellings Relief not apply?

MDR does not apply when transferring a freehold reversion or head lease involving a dwelling with a lease term of 21 years or longer.

If you happen to reduce the number of dwellings within three years after the initial transaction, it is likely that you will be required to submit another return and recalculate the tax due.

Does multiple dwellings relief apply with non-residential property included?

When deciding on how to treat a transaction, buyers have the option to either treat it as a commercial property transaction and utilize the commercial property Stamp Duty Land Tax (SDLT) rates, or they can opt for the residential rates and benefit from Multiple Dwellings Relief (MDR) relief. However, it is important to note that the commercial rates of SDLT cannot be used in conjunction with MDR.

Can I claim MDR for mixed-use properties?

Mixed-use properties are defined as buildings that have both residential and non-residential elements. An example of this would be a property that includes a show or shop on the lower level and a flat or apartment above it.

MDR, or the Mixed-Use Development Relief, can only be used for the residential portion of a transaction. For non-residential parts, regular SDLT rates will apply.

Can I claim multiple dwellings relief for off-plan property purchase?

The relief provides for purchasing properties that are not yet constructed or adapted for residential use by the transaction’s effective date. Please note that this information is subject to change and it is advisable to consult the relevant authorities for the most accurate details.

According to HMRC, the term “off-plan” refers to a property purchase in which the contract involves the construction of a dwelling that has not yet begun at the time the contract is substantially completed. This definition is separate from buying undeveloped land with planning permission, but without the obligation to construct a dwelling. The Mandatory Disclosure Rules (MDR) will be applicable to the former scenario, but not to the latter.

Do I have to pay the 3% SDLT Surcharge?

If you own a home, a 3% Stamp Duty Land Tax (SDLT) surcharge is applicable when purchasing additional residential properties. It is important to note that this surcharge does not apply when purchasing a home to replace your current residence.

Multiple Dwellings Relief offers potential savings in stamp duty when purchasing two or more properties. However, both Stamp Duty Land Tax and Multiple Dwellings Relief can be intricate and complex. It is advisable to seek professional guidance to navigate through these complexities.

When considering whether to claim multiple dwellings relief, it is important to carefully weigh your options. This relief does not apply automatically and must be claimed. Additionally, in certain cases, a purchaser may opt for a different rule where the purchase of six or more dwellings in one transaction is treated as a non-residential transaction for SDLT purposes. To determine the most tax-efficient route, it is advisable to seek professional advice from a tax expert who can assess the available options and guide you accordingly.

When can you claim multiple dwellings Relief?

To be eligible for Multiple Dwellings Relief, your transaction must involve at least two dwellings. However, if it is a single dwelling that is part of a ‘linked transaction,’ it can also qualify. A linked transaction refers to a connected series of property transfers.

To qualify for multiple dwellings relief, it is necessary to acquire two or more properties in the same transaction or linked transactions. If the purchase involves between 2 and 5 properties, residential MDR will be applicable. However, if the properties being purchased are more than 5 or a mix of residential and commercial, non-residential SDLT rates can be applied. It is worth noting that non-residential SDLT rates are generally lower than residential rates.

Does an annexe qualify for multiple dwelling relief?

The classification of an annexe as a separate dwelling depends on its self-contained nature. While some self-contained annexes may be considered separate dwellings, it’s not always the case. The criteria for determining this can vary, so it’s best to seek specific advice in each situation.

Claiming multiple dwellings relief

Multiple dwellings relief is a tax relief that can be claimed when purchasing multiple residential properties. Professional advisors or SDLT accountants can assist in claiming this relief.

To provide evidence of multiple dwellings, a surveyor’s report or property floor plan can be useful, containing detailed information.

Can I claim multiple dwellings relief retrospectively?

Yes, it is possible to make a retrospective Multiple Dwellings Relief (MDR) claim if you have overpaid stamp duty. You have up to 12 months from the filing date to submit the claim.

The relief for Multiple Dwellings Relief (MDR) on Stamp Duty Land Tax (SDLT) can be claimed or amended if it was not included in the initial return. These amendments can be made within a time frame of up to twelve months from the original return filing.

Is multiple dwellings relief available for non-residents?

Yes, Multiple Dwellings Relief can be claimed when purchasing multiple dwellings, even by non-UK residents who are subject to higher rates.