Hillier Hopkins LLP: A guide to multiple dwelling relief

Natasha Heron, from Hillier Hopkins LLP, has written an article to provide guidance on multiple dwelling relief, such as stamp duty.

Hillier Hopkins LLP: A guide to multiple dwelling relief

Natasha Heron

Multiple Dwelling Relief (MDR) is increasingly a hot topic with purchasers and property advisors as knowledge of the tax relief increases. The relief can offer purchasers of residential property considerable Stamp Duty Land Tax (SDLT) savings, says Natasha Heron.

Stamp Duty Land Tax is a tax on any purchase of a property in England and Northern Ireland and the basic mechanism of relief allows a purchaser to divide the purchase price across a number of dwellings and then pay a reduced amount of SDLT. The result can be extremely advantageous if one of the dwellings is significantly smaller in comparison to the other dwellings.

The key is identifying whether more than one dwelling is being purchased.

The definition of a ‘dwelling’ is not included within SDLT legislation, but it is widely accepted as a building or part of a building which accommodates all an individual’s basic domestic living needs. By requiring the building or part of a building to be suitable for use as a ‘single’ dwelling, the statutory language emphasises its suitability for self-sufficient and stand-alone use. In layman’s terms, this means does the building contain the facilities for it to be occupied as a home?

Most people should be able to easily identify when two dwellings are purchased – for example, when two flats are purchased in a single deal. But what if the buildings are converted garages, pool houses, barns, outhouses or annexes for elderly parents or guest accommodation?

As with any relief, there are criteria which must be met in order to increase the likelihood of an additional property qualifying for the relief.

Does it have facilities to be used independently from the main house?

Does the building, or part of a building, include facilities for an occupier to sleep, prepare basic meals and attend to personal hygiene needs?

Is the second property subsidiary to the main building?

To be a subsidiary dwelling, the second property must be less than one third of the size or value of main building. We have had success using both the floor space and value of the property (if a separate valuation can be obtained).

MDR can still be applied if the second property has facilities to be independent from the main house but does not qualify as a subsidiary to the main building, but the 3% higher rate charge will apply to the purchase, reducing the saving.

MDR savings

The following example illustrates the savings that can be made.

  • A transaction completing on 1 August 2021 totalling £1.5m contains one main property and a converted garage, which can be used independently and is deemed to be a subsidiary dwelling.
  • Without MDR, the SDLT charge on a £1.5m purchase cost would be £91,250.
  • However with MDR, the £1.5m is divided by the number of properties, in this example two, and the SDLT is calculated on two purchases of £750,000 each.
  • The SDLT liability is reduced to £50,000 resulting in a saving of £41,250.
  • If the purchase completed on or after 1 October 2021 the saving will reduce to £38,750 as the SDLT holiday rates will have expired.

Why am I just hearing about this relief?

SDLT returns are generally submitted by conveyancing solicitors who are well versed in property law; however, many do not have specialist tax knowledge .

If an MDR claim is submitted it may be subject to challenge by HMRC. It is, therefore, strongly recommended that a SDLT expert is consulted as although the savings can be significant, if applied incorrectly the unpaid tax will be due and could then face an HMRC investigation.

Timeframe to make a claim

The relief can be included in the SDLT1 return at the time of purchase. If, however, a purchase has already completed, the timeframe to make and SDLT refund claim is relatively short – generally 12 months from the date the SDLT1 was due to be submitted to HMRC. Typically, this means a maximum of 12 and a half months from the date of purchase.

If you believe your property purchase may be eligible for the MDR relief raise the issue  with your conveyancing solicitor at the earliest possible stage.

We support purchasers and their conveyancing solicitors in claiming this valuable tax  relief. Please make an enquiry as soon as possible to avoid disappointment.


Natasha Heron is a Tax Manager specialising in property taxes at accountants Hillier Hopkins. She can be reached by email: natasha.heron@hhllp.co.uk.


Visit www.hillierhopkins.co.uk.


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