Stamp Duty Land Tax

Stamp Duty Land Tax – Changes are afoot…..

In recent years there has been a flood of cases presented at Tax Tribunal regarding Stamp Duty Land Tax (SDLT) Multiple Dwellings Relief (MDR).  These have primarily arisen because of several “unreasonable” and retrospective claims that a purchase consisted of two or more dwellings.  Such claims push the boundaries of what constitutes a dwelling, such as an indoor entertainment area that included a swimming pool and toilet at the end of the garden, or an integral garage with a toilet and basin!

5th August 2022

What is MDR?

Currently, MDR is available on the acquisition of two or more dwellings in a single transaction.  Its effect is to reduce the SDLT liability by averaging the chargeable consideration across the number of dwellings purchased.  SDLT is calculated on each dwelling as though they were independent of each other so that each benefits from the first £125,000 being at 0%.  The result is then multiplied by the number of dwellings to arrive at the final SDLT liability.

Subsidiary Dwellings

Where the second dwelling is a ‘subsidiary dwelling’, for example an annexe, the 3% additional residence surcharge is not applied provided that:

  1. the value of the subsidiary dwelling accounts for less than one-third of the total property value; and
  2. the surcharge does not apply to the main residence being purchased.

Example 1

Lord Grantham is purchasing Downton House, which includes a self-contained annexe, for £1.5m.  Lord Grantham is replacing his main residence and the annexe makes up less than one-third of the property’s total value.  The SDLT liability would be £93,750 without any claim for relief.  The effect of an MDR claim is to reduce the SDLT to £55,000 thus saving Lord Grantham £38,750. 

Proposal Changes

To tackle “unreasonable” claims, H M Revenue & Customs is proposing one of the following options to restrict the application of MDR:

  1. Acquisitions of three or more dwellings;
  2. Acquisitions of dwellings for a ‘qualifying business use’; or
  3. Acquisitions of dwellings where a subsidiary dwelling (such as an annexe) is worth more than one-third of the entire property.




HMRC’s consultation on the changes ended in February 2022 and, as yet, we are awaiting the outcome.

Any of the proposals would make it much clearer when an acquisition can qualify for MDR and will restrict the number of unjustified claims, although there is little mention anywhere of the vast number of valid claims that are made each year under the current rules.


If you are considering a purchase of a property that includes two or more dwellings and you are unsure if it is eligible for MDR, please do contact Laura at or click here.