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Stamp Duty Land Tax – Multiple Dwellings Relief (MDR)

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Richard Turner - Menzies Accountant

Richard Turner – Senior Manager

In July 2011 the government introduced a relief designed to encourage private investors into the residential property market. The relief operated by reducing the amount of Stamp Duty Land Tax (SDLT) payable on the acquisition of two or more dwellings, by reference to the “average” price per property rather than on the combined price. 

Whilst government policy on the residential property market seems to have changed since those days, the relief still remains

How does stamp duty land tax relief work?

An example:

  • A property investor acquires 2 flats worth £250,000 each and a house for £400,000 in a single transaction. 
  • Under normal rules SDLT would be calculated on the total consideration of £900,000. SDLT due being £62,000.
  • However using multiple dwellings relief, we can use the average consideration (£900,000/3) to determine the rate applicable. 
  • This provides an SDLT liability of £42,000.

A saving of £20,000.

The application of the relief provides some attractive tax savings and also has some surprising applications. 

For these purposes “dwelling” means a building or part of a building which is suitable for use as a single dwelling or is in the process of being constructed or adapted for such use. Accordingly it may be possible, depending on the facts, that a self-contained annexe falls within the definition of a dwelling in its own right and therefore that the relief could extend and be applicable to more situations. 

If this change is not of relevance to you, please do pass this on to anyone that you know will be affected by it. For specialist advice please do not hesitate to contact Menzies stamp duty tax expert, Richard Turner directly. 


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