Claim Multiple Dwellings Relief to reduce SDLT

Multiple Dwelling Relief allows the Stamp Duty Land Tax on the purchase of two or more dwellings purchased in a single transaction, a scheme or a series of linked transactions to be reduced by a significant amount.

A dwelling is classified as each buildings being independent from each other, and possess all the necessary domestic facilities to enable someone to live in each independently. This also extends to flats, where although the building is one unit, each flat is classified as a separate dwelling.

Annex’s do not count. Or at least, MDR has previously been refused at tax tribunals on the basis of MDR applying to a building and 1 annex.

If MDR is applicable, SDLT isn’t calculated as one purchase, but each dwelling separately.

For example:

• If you purchased a property for £845,000
• SDLT is calculated at 3% on the first £500,000
• SDLT is calculated at 8% on the remaining £345,000
• The total SDLT due is therefore £42,600
• Under MDR, the £845,000 is split into 2 transactions (for 2 properties), so £422,500 at 3%, SDLT, and then another £422,500 at 3%.
• The total SDLT is £12,675 on each property, and £23,350 in total.

In this example, by not claiming MDR, you could have overpaid £17,250!