HMRC SDLT: SDLTM29905 – Relief for transfers multiple dwellings: Overview
Relief for Transfers of Multiple Dwellings: Overview
This section of the HMRC internal manual provides an overview of the relief available for transfers involving multiple dwellings. It outlines the principles and concepts associated with the relief.
- Explains the eligibility criteria for claiming relief on multiple dwelling transfers.
- Details the calculation methods for determining the relief amount.
- Describes the application process for claiming the relief.
- Highlights potential exceptions and special cases.
Read the original guidance here:
HMRC SDLT: SDLTM29905 – Relief for transfers multiple dwellings: Overview
SDLTM29905 – Relief for Transfers of Multiple Dwellings: Overview
What is the Multiple Dwellings Relief (MDR)?
The Multiple Dwellings Relief (MDR) is a form of tax relief that applies to Stamp Duty Land Tax (SDLT) when you’re buying more than one residential property in a single transaction. This relief can help reduce the amount of tax you pay on the purchase of multiple homes.
Changes to the MDR
The MDR will be removed for transactions that are completed or significantly progressed after 1 June 2024. However, there are specific transitional rules designed to assist buyers during this change. More details on these rules can be found at SDLTM29902.
Linked Transactions
If your purchase involves linked transactions—which are purchases related to each other—you can find specific rules applicable to these situations at SDLTM29903.
How is the Relief Calculated?
– To determine the SDLT for the interests in residential properties, the consideration (the price paid) is divided by the number of dwellings being purchased.
– This results in an average price (mean consideration) for each dwelling.
– The minimum rate of SDLT applicable is 1%.
Your Choice to Claim Relief
– It is important to note that the purchaser must actively claim this relief; it does not apply automatically.
– In some situations, a buyer may opt for the rules under FA03 S116(7). This allows for the purchase of six or more dwellings in a single transaction to be treated as a non-residential transaction for SDLT purposes.
– If both the MDR and non-residential transaction option apply, you can choose the one that offers the best tax benefits.
Different Rates for Non-Dwelling Transactions
If the transaction also includes interests in non-residential land, the SDLT rate that would normally apply will remain unchanged, without the benefit of MDR on these parts of the purchase.
Specific Exclusions for Relief
– There are restrictions on relief for certain types of ownership. For example, superior freehold or leasehold interests in dwellings that come under long leases—specifically those lasting 21 years or more—are not eligible for the relief, except in some shared ownership arrangements. Details can be found in SCH6B PARA 2(7).
Off-Plan Purchases
The MDR also covers “off-plan” purchases. This term refers to properties that are being sold before construction has started.
– For a transaction to be considered ‘off-plan,’ the contract must involve a dwelling that is intended to be built, and construction should not have started when the transaction is considered significantly performed.
– There is a distinction between off-plan purchases and buying bare land that has planning permission but no requirement to build a dwelling.
Tax Adjustments Based on Property Numbers
If the number of dwellings in a purchase is reduced within three years from the effective date of the transaction, the tax calculation can be adjusted accordingly to reflect this change.
Higher Rates of SDLT
When buying multiple dwellings, even if you’re subject to the higher rates of SDLT (for example, if buying additional residential properties), you can still benefit from multiple dwelling relief.
– However, the tax on the average consideration will incorporate the higher rates applicable to these transactions.
Non-Resident Purchasers
For buyers who are not UK residents:
– If you are purchasing multiple dwellings and are subject to the higher rates for non-residents, you are still eligible for multiple dwelling relief.
– As with the previous example, the rate of tax applied to the average consideration will take into account the higher rates for non-resident buyers and the higher rates applicable to additional residential properties.
Conclusion on Choices Available
Purchasers have choices when it comes to how they structure their transactions:
– You can claim MDR, which can reduce your SDLT liability on multiple dwellings.
– Alternatively, you might opt for a non-residential treatment if that turns out to be more financially sensible given your situation.
It is essential to carefully consider your options and possibly seek professional advice to determine the best approach based on current tax rules and your specific circumstances.