The Chancellor of the Exchequer has announced that the valuable Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax (SDLT) is to be abolished.

The relief will cease to be available for transactions completing on or after 1 June 2024.  However, if contracts for the purchase had already been exchanged prior to the announcement on 6 March, then MDR could still be available regardless of when the transaction completes.

MDR is available if two or more dwellings are comprised in a single transaction.  The relief works by averaging the purchase price between the number of dwellings, calculating the SDLT on that averaged price and then multiplying that figure by the number of dwellings to get to the much lower final liability.

Mr & Mrs Happy are buying a house with adjoining cottage for £1 million.

The main house will be a replacement main residence and the value of the cottage accounts for £300,000 of the purchase price.

As such, the 3% additional dwelling surcharge will not apply.

SDLT on £1 million would ordinarily be £41,250 but with a claim for MDR, this reduces to £25,000 – a significant saving of £16,250.

This relief has been open to abuse in the past with much case law on the subject, particularly around whether an annexe can be classed as a separate dwelling to the main house.

There remains a window of opportunity for anyone currently in the process of buying two or more dwellings and we can help you navigate the complexities of what constitutes a separate dwelling to ensure that you benefit from the maximum relief available.

For further advice or assistance, please Click here…