Example 5: Calculating SDLT Relief for Multiple Dwellings and Linked Transactions

Multiple Dwellings Relief and linked purchases of houses and shops

HMRC’s example shows that Multiple Dwellings Relief (MDR) only applies to the transaction that includes the dwellings, even if other purchases are linked to it. Where houses and shops are bought in separate linked transactions, the houses may qualify for MDR, but the shops do not. The linked transaction rules still affect how SDLT is worked out, so the residential and non-residential parts must be calculated separately using different methods.

• An individual buys four houses for £1,200,000 in one transaction and two shops for £300,000 in a separate linked transaction, making total linked consideration of £1,500,000.
• The houses transaction can qualify for MDR, so SDLT is calculated by dividing £1,200,000 by 4, working out the tax on £300,000, and then multiplying that result by 4.
• The shops transaction does not qualify for MDR, even though it is linked to the houses purchase.
• For the shops, HMRC’s approach is to calculate tax by reference to the total linked consideration of £1,500,000 and then apportion that tax to the shops’ £300,000 share, which is 20%.
• The higher rates for additional dwellings may still apply to the houses transaction, and the non-resident surcharge may also apply if the buyer is non-UK resident.
• The overall SDLT bill is the tax on the houses under MDR plus the apportioned tax on the shops, with the legislation remaining the final authority if there is any dispute.

Scroll down for the full analysis.

Multiple Dwellings Relief and linked mixed purchases: how HMRC’s example works

This page explains an HMRC example about Multiple Dwellings Relief (MDR) where a buyer acquires houses in one transaction and shops in a separate but linked transaction. The point of the example is that MDR only applies to the transaction that involves the dwellings, but the linked transaction rules still affect how SDLT is worked out across the whole set of purchases.

What this rule is about

MDR is a relief that can apply when a buyer acquires more than one dwelling in a transaction, or in linked transactions, if the statutory conditions are met. Broadly, it changes the way SDLT is calculated by using the average price per dwelling and then multiplying the result by the number of dwellings.

This example deals with a more complicated situation. The buyer is not just buying dwellings. They are also buying shops in a separate linked transaction. That matters because:

• the purchase of the houses may qualify for MDR, but
• the purchase of the shops does not, and
• the linked transaction rules still require the transactions to be looked at together for rate-setting purposes.

The result is that the residential and non-residential parts are not taxed in the same way, even though they are linked.

What the official source says

HMRC’s example involves an individual who buys:

• the freeholds of four houses in one transaction, and
• the freeholds of two shops in a separate linked transaction.

The total consideration for the linked transactions is £1,500,000.

Of that total:

• the four houses cost £1,200,000 in total, made up of two houses at £250,000 each and two at £350,000 each, and
• the two shops cost £300,000 in total, at £150,000 each.

HMRC says the transaction involving the houses is a relevant transaction for MDR. SDLT on that transaction is therefore calculated by dividing the £1,200,000 dwelling consideration by 4, calculating the tax on that average amount, and multiplying the result by 4.

HMRC also says the higher rates for additional dwellings apply because the transaction consists of major interests in dwellings. The non-resident SDLT rates may also apply if the buyer is non-UK resident.

The separate transaction involving the shops is not a relevant transaction for MDR. But because the transactions are linked, SDLT on the shops is not worked out by looking only at the £300,000 paid for the shops. Instead, HMRC says you calculate the tax due on the total linked consideration of £1,500,000 and then apportion that tax to the non-residential consideration of £300,000. Since £300,000 is 20% of £1,500,000, the tax due on the shops is 20% of the tax calculated on £1,500,000.

What this means in practice

The key practical point is that MDR does not simply turn all linked purchases into one averaged calculation. You have to separate out which transaction is actually eligible for the relief and which is not.

In HMRC’s example:

• the houses are dealt with under the MDR rules, because that transaction involves multiple dwellings, but
• the shops are dealt with under the linked transaction rules for non-residential property, without MDR.

This matters because a buyer might assume that once transactions are linked, everything is taxed on one blended basis. That is not what HMRC is showing here. The linked transaction rules remain relevant, but they operate differently depending on the nature of each transaction.

The example also shows that the house transaction can still attract the higher rates for additional dwellings. MDR changes the method of calculation, but it does not in itself switch off the higher rates. If the statutory conditions for the higher rates are met, they still apply to the dwelling transaction.

Likewise, if the buyer is non-UK resident and the non-resident surcharge applies, HMRC indicates that this may also apply to the dwelling transaction.

How to analyse it

When looking at a set of linked property purchases like this, it helps to work through the following questions in order.

1. What are the separate transactions?

Start by identifying each land transaction separately. In this example, there are two: one for the houses and one for the shops.

2. Are the transactions linked?

If they are linked, the linked transaction rules affect the SDLT calculation. HMRC’s example assumes they are linked, so the total linked consideration of £1,500,000 must be taken into account.

3. Which transaction, if any, is a relevant transaction for MDR?

You then ask whether a particular transaction is one to which MDR can apply. Here, the houses transaction is relevant for MDR. The shops transaction is not.

4. What consideration relates to the dwellings?

For the MDR calculation, only the consideration attributable to the dwellings is used. In the example, that is £1,200,000 for the four houses.

5. How is SDLT calculated on the dwelling transaction?

Under HMRC’s example, divide the dwelling consideration by the number of dwellings. Here that is £1,200,000 divided by 4. Calculate SDLT on that average figure, then multiply by 4.

6. Do any residential surcharges apply?

Do not stop at the MDR calculation. Consider whether the higher rates for additional dwellings apply, and whether the non-resident rates may apply. HMRC expressly flags both points.

7. How is the non-residential linked transaction taxed?

For the shops, HMRC says to calculate tax by reference to the total linked consideration of £1,500,000, then apportion that total tax to the shops’ share of the consideration. Since the shops account for £300,000 out of £1,500,000, they bear 20% of that tax.

Example

Illustration based on HMRC’s example:

• A buyer acquires four houses for £1,200,000 in one transaction.
• The same buyer acquires two shops for £300,000 in another linked transaction.
• Total linked consideration is £1,500,000.

For the houses:

• identify 4 dwellings,
• divide £1,200,000 by 4, giving an average of £300,000 per dwelling,
• calculate SDLT on £300,000, applying any relevant residential surcharges,
• multiply that result by 4.

For the shops:

• ignore MDR, because the shops transaction is not a relevant transaction for the relief,
• calculate the tax on the total linked consideration of £1,500,000 under the non-residential linked transaction approach described by HMRC,
• take 20% of that amount, because £300,000 is 20% of £1,500,000.

The total SDLT liability is then the sum of the tax on the houses transaction and the tax apportioned to the shops transaction.

Why this can be difficult in practice

The main difficulty is that several SDLT rules are operating at once:

• MDR for the dwelling transaction,
• linked transaction rules across both purchases,
• the higher rates for additional dwellings, and possibly
• the non-resident surcharge.

That combination can be hard to follow because each rule has a different function. MDR changes how tax is calculated for qualifying dwellings. The linked transaction rules affect rate-setting and apportionment across connected purchases. The higher rates and non-resident rates are surcharges that may still apply to the residential part.

Another practical difficulty is correctly identifying what counts as the relevant transaction for MDR. In a mixed portfolio acquisition, not every linked purchase will qualify for the relief. The fact that transactions are linked does not mean the relief applies across all of them.

A further point is that HMRC’s manual is explaining HMRC’s approach. The legal effect ultimately depends on the legislation. In most cases the manual is a useful guide to HMRC’s view, but the legislation remains the primary source if there is any dispute about the correct treatment.

Key takeaways

• MDR applies only to the transaction involving the dwellings, not automatically to every linked transaction.
• Linked transaction rules can still affect the SDLT calculation for non-residential property bought alongside dwellings.
• If the dwelling transaction involves major interests in dwellings, the higher rates for additional dwellings may still apply, and the non-resident rates may also need to be considered.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Example 5: Calculating SDLT Relief for Multiple Dwellings and Linked Transactions

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