Stamp Duty, Multiple Dwellings Relief and Apportionment

When buying properties that comprise more than one residence, multiple dwellings relief (MDR) is available against Stamp Duty Land Tax (SDLT). As a First-tier Tribunal (FTT) ruling showed, however, both the availability and extent of such relief is often hotly contested by HM Revenue and Customs (HMRC).

The case concerned a substantial property that was purchased by a company for £875,000 with a view to converting it into a care facility. It comprised a main house, an annexe that was laid out as two apartments, an office block and a summerhouse. Following the acquisition, the purchaser paid £33,750 in SDLT.

HMRC's initial view was that SDLT at 15 per cent – a total of over £130,000 – was payable on the transaction. Following negotiations, however, they accepted that the annexe contained two dwellings separate from the main house and that MDR was therefore at least partially available. That, however, was not the end of the matter in that there was no agreement as to how the purchase price should be apportioned between the different dwellings comprised in the property.

HMRC took the view that the main house, the office block and the summerhouse comprised a single dwelling that accounted for more than £500,000 of the purchase price. That sum being the relevant threshold at the time, HMRC asserted that MDR could not be claimed in respect of that dwelling. Overall, they contended that £82,388 in SDLT was payable on the transaction.

The purchaser argued that the main house was a stand-alone dwelling and that the office block and summerhouse formed part of the annexe. The value of the main house being below £500,000, it argued that MDR was available in respect of the entire transaction, giving rise to an SDLT liability of £23,750.

Ruling on the matter, the FTT found that the property comprised three dwellings of equal importance to the purchaser's business, all of which qualified for MDR. It ruled on the evidence that the main house included the summerhouse but not the office block. It was just and reasonable to apportion the purchase price between the dwellings in accordance with their respective floor areas. On that basis, SDLT payable on the transaction came to £13,749. It followed that the purchaser was entitled to an SDLT refund of £20,001.