Consultation: Stamp Duty Land Tax, Mixed-Property Purchases and Multiple Dwellings Relief

HMRC is considering hypothetical changes to the way in which the SDLT liability is calculated for both residential and non-residential property. Views are sought from respondents on the effect that these changes could have on taxpayers and commercially, they include:

• Apportioning the total consideration between residential and non-residential elements of a transaction and calculating the tax on each part accordingly.
• Introducing a threshold whereby transactions would need to constitute a significant amount of non-residential property to be treated as non-residential transactions.

HMRC have made a number of different proposals that would reform and limit the application of Multiple Dwellings Relief (MDR) which currently applies where more than one dwelling is purchased as part of a single or linked transaction. These proposals include:

• Introducing a purpose test allowing MDR only if either all or some, of the dwellings, are purchased for either development and resale or exploitation as a source of rents.
• Aligning MDR to the subsidiary dwelling exemption which applies to the higher rates of SDLT.
• Allowing MDR for purchases of three or more dwellings rather than two currently.

Responses can be made via email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Responses are requested by 22 February 2022.

Useful guides on this topic

SDLT: Stamp Duty Land Tax, start here
What is SDLT? What are the SDLT rates? What is exempt from SDLT? What reliefs are available? When are returns due? When can you amend a return?

SDLT: Multiple Dwellings Relief
What is Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax purposes? When does it apply and how is it claimed?

SDLT: MDR & Annexes Tool
Stamp Duty Land Tax (SDLT) Tool, if you are buying two or more properties in a single transaction use this tool to see if you meet the qualifying conditions and you may be able to claim both Multiple Dwellings Relief and relief from the Higher Rate Charge.

SDLT: Residential property & dwellings
What is residential property for Stamp Duty Land Tax (SDLT)? What tax rate applies? What garden and grounds are subject to higher rates of SDLT?

SDLT: At a glance, Stamp Duty Land Tax, rates & allowances
What is Stamp Duty Land Tax (SDLT)? What are the rates of Stamp Duty Land Tax (SDLT)?

External Links

Stamp Duty Land Tax: mixed property purchases and Multiple Dwellings Relief

Q1 – What do you see as the advantages and disadvantages of apportionment?

Q2 – What are your views on how the mixed-property rules interact with the other aspects of SDLT ?

Q3 – What issues would arise in particular for mixed-property purchases that included an MDR claim if apportionment was introduced?

Q4 – What impact would apportionment have on both individual and business purchasers of mixed-property?

Q5 – What impact would apportionment have on business transactions?

Q6 – What impact would apportionment have on others involved in the purchase, such as tax practitioners, conveyancers and valuers?

Q7 – What would the impacts be on purchasers of having to value both the residential and non-residential elements of a purchase?

Q8 – At what stage in a purchase could a purchaser expect to determine the relative values of the residential and non-residential elements of the property? For example, research, survey, consultation with a selling agent, or exchange.

Q9 – Do you agree that apportionment would discourage abuse and give more equitable outcomes in calculating SDLT?

Q10 – Looking at the information in Annex A, do you have an alternative method of calculation for apportionment that would be effective in discouraging incorrect claims that the purchase of residential property is actually is of mixed-property?

Q11 – What would be the impact of allowing mixed-property treatment only for transactions that reach a particular threshold of non-residential property? What should such a threshold be and why?

Q12 – What do you see as the advantages and disadvantages of allowing mixed-property treatment only where a minimum proportion of the consideration is in respect of non-residential land?

Q13 – Do you have alternative proposals to the ones set out in this consultation that would be effective in discouraging incorrect claims that the purchase of residential property is actually of mixed-property?

Q14 - How do the rules for mixed-property feature in commercial decision making?

Q15 – What would be the impact of changes to the mixed-property rules for businesses that typically make purchases of both residential and non-residential land, for instance, corner shops, bed and breakfasts, pubs? Please consider both changes in the form of apportionment and a threshold. 26 Questions about Multiple Dwellings Relief

Q16 - What are respondents’ views on the introduction of an intention test?

Q17 - What are respondents’ views on the application of the proposed three-year posttransaction period?

Q18 - What impacts would Option 1 have on businesses?

Q19 - Do you foresee any issues with the proposed method of calculating the relief?

Q20 - Are there any other types of property-related businesses purchasing residential property (and which support the aims of MDR) that should qualify for relief under Options 1 or 2?

Q21 - What would be the impact of Options 1 and 2 on the structuring of commercial transactions involving the purchase of dwellings?

Q22 - does Option 3 introduce any other impacts on businesses? Questions about all the MDR Options

Q23 - What do you see as the advantages and disadvantages of each of the options set out above?

Q24 - Are there any other solutions to the problem described above not covered by the options in this consultation and which would, in your view, tackle the problem more effectively and efficiently?

Q25 - Would options 1, 2 and 4 have any material negative impact on the purchase of property which contains, for example, an annexe that is intended to provide accommodation to an aged or vulnerable person, typically a relative? If so, would option 3, either alone or in combination with the other options, present a solution to this negative impact? Questions concerning MDR more generally

Q26 – How does MDR feature in commercial decision making?

Q27 To what extent does the availability of MDR impact purchasing decisions where the six or more rule applies?

Q28 - To what extent does MDR currently impact on the supply of housing for both rental and purchase?