How Can You Claim Multiple Dwellings Relief?

Claiming Multiple Dwellings Relief

Are you considering claiming Multiple Dwellings Relief for Stamp Duty Land Tax? Does your conveyancer require an opinion from a trusted tax lawyer confirming whether or not MDR can be claimed? Have you been approached by an advisor after the purchase of your home, offering you a chance to claim money back from HMRC? If so, it’s a good idea to think carefully about your options – and seek advice from a trusted tax lawyer before you go ahead with your claim. Here’s why…

What is Multiple Dwellings Relief?

Multiple Dwellings Relief was introduced to reduce the stamp duty cost of buying several dwellings in the same or a linked transaction – by adding up the total cost of all the properties and calculating the rate of Stamp Duty Land Tax (SDLT) based on the average price of each of the dwellings. The resulting figure is then multiplied by the number of dwellings to arrive at the total SDLT charge subject to a minimum rate of 1% or 3% depending on the situation.

In this way, each dwelling gets the benefit of the nil-rate and lower rate bands of SDLT when they would not if MDR was not claimed.

Take this example. You buy a property for £1.2million. SDLT is calculated at £63,750. But if that property contains a self-contained dwelling – such as a granny annexe – the SDLT would be calculated on two properties worth a total of £1.2m (ie £600,000 each). This puts each of the properties into a lower SDLT band, and the resulting total SDLT would be £40,000. (Example based on effective date of 1 10 2021 for UK resident individual purchaser not owning another dwelling).

An experienced tax barrister can advise you on whether your purchase is eligible for MDR, guide you through the claims process or retrospectively claim overpaid SDLT if you have mistakenly paid a surcharge on a multiple dwelling.

Find out more about SDLT reliefs with this guide on multiple dwelling reliefs.

Who Can Claim Multiple Dwellings Relief?

Individuals or companies can claim MDR. You may be eligible for MDR if you purchase:

• Two or more dwellings in a single transaction
• Dwellings in a scheme arrangement or a series of linked transactions.
• Dwellings with a commercial element (eg flats above a shop or properties with offices).
• A dwelling with an annexe or outbuildings or holiday cottages
• A large property that is divided into some dwellings

Who Can’t Claim Multiple Dwellings Relief?

A company or other non-natural person purchasing dwellings above the £500,000 threshold for the flat 15% rate of SDLT where none of the reliefs from the 15% higher rate apply.

How Do You Calculate Multiple Dwellings Relief?

Calculating your MDR can be complicated, especially as there is confusion over HMRC’s guidance regarding the definition of a ‘dwelling’, and over the minimum rate of SDLT on dwellings with an element of mixed-use in the transaction (sometimes cited as 3%, but 1%). For this reason, it’s wise to talk to a tax lawyer with experience in the nuances of Multiple Dwellings Relief and SDLT before you claim MDR. Use this link to read our helpful guide to MDR.

You can view more about mixed-use below.

How Do You Apply for Multiple Dwelling Relief?

In most cases, your conveyancing solicitor or property accountant will calculate your SDLT and Multiple Dwellings Relief, and the claim will be made within the land transaction return.

If you are claiming MDR after the purchase of the property – for example, if you think that your conveyancer failed to draw attention to your eligibility for MDR – you will need to claim to HMRC within 12 months of the filing date of the SDLT return for your purchase. You are always advised to seek the guidance of a tax lawyer before claiming within this period.

How Can Cannon Chambers Help?

If you are considering claiming Multiple Dwellings Relief, we at Cannon Chambers provide unbiased legal advice and help with making a claim. If an MDR claim cannot be justified we will let you know.

There are many ‘claims farm’ businesses offering to reclaim overpaid MDR in return for a fee. In some cases, they falsely make a claim, and the client is faced with an HMRC investigation which could prove costly and damaging. For this reason, it is far better to consult with tax lawyers to review legitimate reasons to reclaim overpaid SDLT or claim MDR at the time of purchase.

Offering video consultations as well as face-to-face meetings, clients based outside London can save time and money while benefitting from the expertise of a leading specialist London tax barrister. Contact Cannon Chambers here for more information or to instruct a barrister.

Frequently Asked Questions About Claiming MDR

What Constitutes a Second Dwelling?

Any residential property that is ‘self-contained’ is called a dwelling. So, for example, a second dwelling such as a granny annexe has to have its own front door, kitchen area, bathroom, and living and sleeping accommodation: see our MDR guide for further details.

Can You Claim Multiple Dwellings Relief Retrospectively?

Taxpayers who have not claimed MDR in their original tax return have up to 12 months from the filing date of their original return to make the amendment to their return and file that with HMRC. The filing date is 14 days after the effective date of the property purchase.

Is Multiple Dwellings Relief Available for Companies?

Yes, it is unless the flat 15% rate applies to the purchase of a dwelling.

Does an Annexe Qualify for Multiple Dwelling Relief?

Yes, potentially as long as it has a separate front door, kitchen facilities, bathroom, living and sleeping area – see our detailed MDR guide.