Stamp Duty Land Tax – changes ahead for multiple and mixed-use purchases

Stamp Duty Land Tax – changes ahead for multiple and mixed-use purchases

Buyers looking to pay reduced rates of Stamp Duty Land Tax (SDLT) when buying multiple residential properties or claiming mixed residential and non-residential use can expect a tightening of the rules following a consultation by HMRC.

Stamp Duty Land Tax (SDLT) is a self-assessed tax that falls due for payment within 14 days of the completion of a purchase of a freehold, leasehold or shared ownership residential property in England and Northern Ireland where the market value is more than£125,000 (separate taxes apply in Wales and Scotland).  It is a progressive tax that is linked to the purchase price.

The consultation by HMRC has put the spotlight on how SDLT is calculated in two key areas:

- Transactions using the Multiple Dwelling Relief (MDR) rules

- Transactions involving mixed-use purchases of both residential and non-residential property.

Under the present rules, MDR can be claimed when at least two “Dwellings” (as ‘defined by HMRC by applying certain indicators, for example whether there is a separate council tax bill and energy supply, or a lockable front door, as well as the facilities needed to live independently, such as a toilet or washing facilities)are purchased in a single transaction, or as part of a series of linked transactions between the same buyer and seller. SDLT on these transactions is calculated based on the average value of each dwelling, rather than on their combined value, which can enable significant savings for a buyer.

Putting it simply, for example, the SDLT calculation on a single transaction comprising three freehold dwellings at a total cost of £1.5 million would be £93,750, where the purchaser is UK resident and does not own any other properties anywhere else in the world at the time of completion of the purchase. However, if the same purchaser claimed MDR, the tax would be worked out based on a purchase of 3 individual properties each valued at £500,000, which would reduce the amount payable to £45,000.

Currently, lower non-residential rates apply to mixed-use purchases, such as purchases of a country house with land that is let out to local farmers for grazing, to fast food shops with flats above, pubs and B&Bs, and large-scale city centre developments comprising ground floor retail outlets with floors of flats.

Given that mixed-use purchases are classed as non-residential, as well as benefiting from the lower non-residential rate of SDLT, buyers can avoid the surcharges due if they already own a residential property, or they live overseas.

Mixed-use purchases can be combined with MDR, while still qualifying as being non-residential, unlike claims for multiple dwellings involving only residential property, which would be calculated to include any surcharges payable by existing residential property owners or non-UK residents.

Non-residential property rates are also applied to purchases of six or more dwellings in a single transaction

Since all property purchases are unique, it does not follow the general SDLT rules are applied in all circumstances. Because of the complexity of the rules, which are set out in the Finance Act 2003, property lawyers recommend that buyers of multiple dwellings or mixed-use properties seek specialist advice from a professional TaxAdvisor to avoid any pushback by HMRC regarding claims that are misrepresented.

For more information on the consultation, please click here, or to discuss a conveyancing matter, please contact our Client Services team on 01752 292201 or email

Web site content note:

This is not legal advice. We intend to provide information of general interest about current legal issues.

    Get in touch to discuss how we can help you.

    This site is protected by reCAPTCHA. The Google Privacy Policy and Terms of Service apply.