What do you need to know if you are acquiring multiple dwellings?
If you are looking to purchase multiple properties, are you worried about the amount of Stamp Duty Land Tax you will have to pay? If so, did you know there is a form of relief called Multiple Dwellings Relief?
Multiple Dwellings Relief (MDR)
MDR may available for a transaction or series of linked transactions of more than one dwelling. The relief itself can reduce the rates of SDLT chargeable and therefore reduce the overall amount of SDLT due upon completion.
How to know if MDR applies to you.
MDR may apply to a transaction if:
- The transaction is of at least two dwellings; or
- The transaction is in relation to a single dwelling where:
- It is one of a number of linked transactions; and
- The main subject matter of at least one of the other transactions is an interest in at least one dwelling.
How will this reduce the SDLT Rate?
MDR will fix the rate of SDLT you pay by using the average chargeable consideration for the dwellings rather than the aggregate chargeable consideration.
The SDLT is calculated by the overall consideration for the dwellings, divided by the number of dwellings; this figure is then calculated against the residential SDLT rates. The SDLT is then multiplied by the number of dwellings.
For example, in a recent transaction, a client purchased two dwellings totalling £535,000.00 (£267,500.00 each). The transaction took the overall price of £535,000.00 divided by two (to reflect the number of dwellings), and then was calculated against the SDLT rates resulting in SDLT due of £8,900, which was then multiplied by two for a total SDLT due of £17,800 rather than £30,300 had the relief not been available.
For more specific advice, please get in contact with us.
How can a claim of relief be made?
A claim for MDR must be made in the SDLT return.
Your Solicitor or ourselves will be able to advise you on whether a claim for MDR is possible, and where it is, be able to provide you with the support and advice to make sure the SDLT return is correct in claiming the relief.
What happens if you are late in realising the relief is applicable?
MDR should be claimed within the land transaction return. However, you do have the chance to amend your return so long as it is within 12 months of the filing date.
If you are within 12 months of the filing date and want to claim relief, please contact us.
However, it is important to note that HMRC are not liable to pay you the overpaid amount back if it was due to a mistake of failing to make a claim or election or if you knew that the relief was available. Therefore, it is important you speak to a solicitor at the outset to determine if your transaction is eligible for relief.
Will the SDLT and relief differ for different individuals?
Yes depending on yourself and the circumstances will depend on whether MDR is available. The above is only a small insight into MDR so please get in touch for further individual advice.
Contact us
To find out more, please contact Emma Smith at Emmas@talbotwalker.co.uk.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.