In Fitzgerald & Anor v HMRC [2025] TC09415, the First Tier Tribunal (FTT) ruled that Multiple Dwellings Relief (MDR) was not available for an annexe. The planning permission specified that it could only be used for ancillary purposes to the house and it was not a separate unit of residential accommodation.
- Mr and Mrs Fitzgerald purchased a detached house with an annexe.
- They submitted a Stamp Duty Land Tax (SDLT) return, claiming Multiple Dwellings Relief (MDR) based on the annexe being a separate dwelling.
- HMRC opened an enquiry and issued Closure notices, arguing that the annexe was not a separate dwelling.
- Mr and Mrs Fitzgerald Appealed to the First Tier Tribunal (FTT).
The FTT found that the annexe was not suitable for use as a single dwelling:
- Although the annexe was physically self-contained (with its own kitchen, bedroom, bathroom and utilities), it lacked privacy. It was only suitable for occupation by relatives and not a third-party tenant.
- The planning condition, included in the planning permission for the annexe's construction, specified that it could only be used for ancillary purposes to the house and not as a separate dwelling, prohibiting occupation by a third-party tenant.
- The FTT gave significant weight to the planning condition and the physical factors limiting the suitability of the annexe for occupants other than close relatives.
The FTT dismissed the appeal.
Useful guides on this topic
SDLT: Multiple Dwelling Relief
What is Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax purposes? When does it apply and how is it claimed?
SDLT: Multiple Dwellings Relief Relief for Annexes Tool
Stamp Duty Land Tax (SDLT): You are about to purchase two properties in a single transaction. Perhaps this is the purchase of a larger property with an annexe, a granny flat, or some other kind of accommodation, such as a cottage within the grounds of the larger property.
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)?
Closure notices
When does HMRC issue a Closure Notice? Can a taxpayer demand one? Are there appeal rights?
Statutory Review (by HMRC)
What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review?
How to appeal an HMRC decision
Disagree with a HMRC decision? How to appeal, what type of decision can you appeal, what are your different options when you disagree with HMRC? What are the key steps in making an appeal?
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