lane with cottage

Multiple Dwellings Relief – Have you got a separate dwelling?

Caroline Fleet, Partner, Tax
16/02/2021
lane with cottage

Multiple Dwellings Relief (MDR) is a Stamp Duty Land Tax (SDLT) relief that is available when a taxpayer purchases qualifying residential properties. The relief allows SDLT rates to be applied to the average value of the properties rather than total purchase price.

There have been two recent First-Tier Tribunal (FTT) rulings which provide an insight into how HMRC may distinguish between a single dwelling and two separate dwellings which would qualify for MDR, thus potentially impacting the success of future claims by taxpayers.

The first case David Merchant and Sarah Gater v HMRC, consisted of property with a main house and an annexe, which can be accessed via a common entrance and hallway. The annexe consisted of a living room, kitchen, shower room and bathroom so all the physical amenities for separate living. However, the annexe did not have its own council tax billing, postal address or separate gas and electricity meter separate from the main house and in addition the annexe had no independent external access. The FTT found that the annexe did not form a separate dwelling to the main house and therefore MDR was not available. 

The second case Edward Clare Partridge v HMRC, again consisted of a main house and annexe. In this instance, the annexe had a separate entrance door, separate garden and a separate kitchen area, also the internal doors to the annexe which could be shut off from the main house. However, the bathroom for the annexe was accessed through the main hallway of the main house. The taxpayers’ were considering making alterations to portion off the bathroom from the hallway in order to section off the living and bathroom facilities of the annexe from the main house. The FTT again found that the physical attributes of the annexe and the insufficiency of privacy and security for the occupants of both the main house and the annexe meant that MDR was not available. 

The recent rulings provide further reminders on some of the key determinants that need to be in place for MDR to be claimed. 

For more information on how you can make the most of the available SDLT reliefs, please get in contact with Caroline Fleet or your usual Crowe contact. 

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Caroline Fleet
Caroline Fleet
Partner, Tax
London