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  • FIRST POST
    • Mutton Geoff
    • By Mutton Geoff 27th Oct 17, 7:18 PM
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    Mutton Geoff
    SDLT relief for multiple dwellings
    • #1
    • 27th Oct 17, 7:18 PM
    SDLT relief for multiple dwellings 27th Oct 17 at 7:18 PM
    I bought my house 10 months ago for £1.3m and paid £73,750 SDLT but it's been brought to my attention that I might be able to claim a refund/relief for multiple dwellings.


    https://www.gov.uk/guidance/stamp-duty-land-tax-relief-for-land-or-property-transactions


    Does anyone have any experience of this? The house I purchased was on a single title deed but comprised of two houses joined together. The two houses are a converted coach house and older cottage. They are joined but have their own entrances, kitchens & bathrooms, are not accessible to each other from within and are on separate council tax bills, gas and electricity supplies.


    I have been quoted £1,500 plus VAT (non refundable) for an accountancy firm to sort this out since they claim that it may be possible to claim relief according the rules that say split the £1.3m in two, then pay two lots of SDLT on 650k each which would total £45,000 instead of the £73,750 I paid.


    I'm shopping around for a more competitive quote, but in the meantime wondered if anyone else had experience of this situation? I am aware of the 12 month deadline.
    Compensations/Refunds from Banks & Institutions - £4,165 | Stooz Profits - £7,636 | Quidco - £4,014

    All with a big thank you to Martin and MSE.com from Mutton Geoff!
Page 1
    • anselld
    • By anselld 27th Oct 17, 7:42 PM
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    anselld
    • #2
    • 27th Oct 17, 7:42 PM
    • #2
    • 27th Oct 17, 7:42 PM
    Would the saving from multiple dwelling relief not be largely swallowed up by the fact that one of the properties would become a second residential property and incur the 3% surcharge?

    Why did your conveyancing solicitor not advise the correct SDLT treatment at the time?

    Why do you need an accountant at £1500 plus VAT? Can you not just phone HMRC and ask them the question?
    • Mutton Geoff
    • By Mutton Geoff 27th Oct 17, 8:29 PM
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    Mutton Geoff
    • #3
    • 27th Oct 17, 8:29 PM
    • #3
    • 27th Oct 17, 8:29 PM
    Would the saving from multiple dwelling relief not be largely swallowed up by the fact that one of the properties would become a second residential property and incur the 3% surcharge?
    Originally posted by anselld

    One would think so, but following that link I posted, HMRC rules also state that the surcharge may not be payable:


    Multiple properties in the same building or grounds


    Two or more properties bought together may be treated as one if:
    •they’re in the same building or grounds
    •the main property accounts for two-thirds of the total consideration


    Why did your conveyancing solicitor not advise the correct SDLT treatment at the time?
    Originally posted by anselld

    Because he was not aware that the multiple property would apply in my case, but has since informed me but does not handle this as part of the original conveyancing. His time to resolve this is more expensive.


    Why do you need an accountant at £1500 plus VAT? Can you not just phone HMRC and ask them the question?
    Originally posted by anselld

    Because it is a special tax situation and HMRC are not known for openly explaining how people may exploit their own loopholes. In tax avoidance schemes, professional help is often needed. I know there are specialists here, hence my question.


    I am currently out of the country so phoning HMRC is not possible until late next week.
    Compensations/Refunds from Banks & Institutions - £4,165 | Stooz Profits - £7,636 | Quidco - £4,014

    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • G_M
    • By G_M 27th Oct 17, 10:01 PM
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    G_M
    • #4
    • 27th Oct 17, 10:01 PM
    • #4
    • 27th Oct 17, 10:01 PM
    You bought 10 months ago. And paid the SDLT at that time.

    Surely waiting a further week is no big deal if it saves you a pointless £1500 + VAT accountancy fee??

    • dimbo61
    • By dimbo61 27th Oct 17, 11:38 PM
    • 9,595 Posts
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    dimbo61
    • #5
    • 27th Oct 17, 11:38 PM
    • #5
    • 27th Oct 17, 11:38 PM
    Con con con
    £1,500+ vat poorer.
    Speak to your solicitor
    • Tom99
    • By Tom99 28th Oct 17, 2:52 AM
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    Tom99
    • #6
    • 28th Oct 17, 2:52 AM
    • #6
    • 28th Oct 17, 2:52 AM
    I would think your saving is going to be £19,500 less than you think because of the 3% surcharge on the 2nd property as anselld says.

    I would look up that aspect 1st, before you decide. I would expect there to be some sort of requirement that you can't have your cake and eat it.
    • kinger101
    • By kinger101 28th Oct 17, 10:12 AM
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    kinger101
    • #7
    • 28th Oct 17, 10:12 AM
    • #7
    • 28th Oct 17, 10:12 AM
    Because it is a special tax situation and HMRC are not known for openly explaining how people may exploit their own loopholes. In tax avoidance schemes, professional help is often needed. I know there are specialists here, hence my question.


    I am currently out of the country so phoning HMRC is not possible until late next week.
    Originally posted by Mutton Geoff
    It's not a loophole. If it's in the legislation in black and white, you're not exploiting anything. Just following the correct taxation treatment. Contacting HMRC isn't always easy, but I'd at least do down that route before paying out a fee.

    But you're right about using an accountant (or chartered tax advisor) specializing in this if you do need a professional. Personally I'd use a stamp duty specialist from a reputable firm that doesn't tout for business.

    Just to be clear.....was you solicitor unaware of something about the purchase (because you didn't provide them with details for example), or unaware of the correct taxation treatment. If it's the latter, I'd be reading the terms and conditions closely to see what their duties were with respect to calculating the correct amount of tax.
    Last edited by kinger101; 28-10-2017 at 10:17 AM.
    • chappers
    • By chappers 28th Oct 17, 10:46 AM
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    chappers
    • #8
    • 28th Oct 17, 10:46 AM
    • #8
    • 28th Oct 17, 10:46 AM
    Just going through an exactly identical situation and will be getting the definitive answer on Monday from our solicitors SDLT expert.
    One thing that is for sure is that as a single transaction there is no 3% surcharge for a second property, unless you own further property, in which case the whole transaction would be surcharged.
    • 00ec25
    • By 00ec25 28th Oct 17, 11:49 AM
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    00ec25
    • #9
    • 28th Oct 17, 11:49 AM
    • #9
    • 28th Oct 17, 11:49 AM
    it may be possible to claim relief according the rules that say split the £1.3m in two, then pay two lots of SDLT on 650k each which would total £45,000 instead of the £73,750 I paid.
    Originally posted by Mutton Geoff
    presumably you purchased both properties at the same time? If so will it be classed as a single transaction? If yes then the single transaction falls within the higher rate SDLT under para 4.8 (If two or more dwellings are purchased in the same transaction and at least two of them are worth £40,000 or more and are not reversionary on a lease with more than 21 years to expiry then the transaction will be a higher rates transaction. This is irrespective of whether the individual owns an interest in another dwelling at the end of the day or whether one of the purchased dwellings replaces a main residence.)

    if falling within higher rate then the higher rate is applied to both buildings (para 4.1 "Where an individual purchaser purchases two or more dwellings in the same transaction, different tests determine whether the transaction is liable to the higher rates of tax. A transaction involving more than one dwelling will either be liable to the higher rates of tax or it won’t, the rules do not allow for a single transaction to be a combination of higher and normal residential rates.") and therefore using multiple dwelling relief your calculation would be

    125K @3% = 3,750
    125k @ 5% = 6,250
    400k @ 8% = 32,000
    total 650k costing 42,000 x 2 buildings = 84,000 total payable
    • kinger101
    • By kinger101 28th Oct 17, 12:43 PM
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    kinger101
    presumably you purchased both properties at the same time? If so will it be classed as a single transaction? If yes then the single transaction falls within the higher rate SDLT under para 4.8 (If two or more dwellings are purchased in the same transaction and at least two of them are worth £40,000 or more and are not reversionary on a lease with more than 21 years to expiry then the transaction will be a higher rates transaction. This is irrespective of whether the individual owns an interest in another dwelling at the end of the day or whether one of the purchased dwellings replaces a main residence.)

    if falling within higher rate then the higher rate is applied to both buildings (para 4.1 "Where an individual purchaser purchases two or more dwellings in the same transaction, different tests determine whether the transacimtion is liable to the higher rates of tax. A transaction involving more than one dwelling will either be liable to the higher rates of tax or it won’t, the rules do not allow for a single transaction to be a combination of higher and normal residential rates.") and therefore using multiple dwelling relief your calculation would be

    125K @3% = 3,750
    125k @ 5% = 6,250
    400k @ 8% = 32,000
    total 650k costing 42,000 x 2 buildings = 84,000 total payable
    Originally posted by 00ec25
    I was under the impression OP was implying that one of the properties satisfied the two-thirds/same grounds criteria for the higher rate, but I'm not sure how the "granny-flat" exemption interacts with MDR.

    Depending on exactly how the legislation is worded, it might be possible to obtain both exemptions.

    Would be useful if OP could clarify.
    • Mutton Geoff
    • By Mutton Geoff 28th Oct 17, 2:04 PM
    • 999 Posts
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    Mutton Geoff
    I was under the impression OP was implying that one of the properties satisfied the two-thirds/same grounds criteria for the higher rate, but I'm not sure how the "granny-flat" exemption interacts with MDR.

    Depending on exactly how the legislation is worded, it might be possible to obtain both exemptions.

    Would be useful if OP could clarify.
    Originally posted by kinger101


    The property has one numerical address and that it what is on the title. There is access to two courtyards from the road. One is vehicular, one is pedestrian. Both provide access to the individual front and back doors of the properties. The property is one single cohesive building that has been (internally) joined then divided again in the past (50-100 years ago). One part is a 4 bedroom, 3 bathroom house and subservient to that is a one bed/one bath attached "cottage".


    The cottage is much smaller than the main house and is a smaller fraction of sq footage.


    The tax treatment is not clear which is why a specialist has been contacted for a quote. I am looking for other quotes and advice, here because of my respect for the specialist knowledge of many contributors on this forum, and of my regular tax accountant (awaiting response). Of course I shall ring HMRC but this is difficult using SIP phones or Skype. I will be able to call them on Monday but was hoping to elicit a technical reply here that would assist me in dealing with them.


    The potential return is high enough for me to warrant paying for professional advice rather than risk losing it because I happen upon a clerk at HMRC who is not intimate with the rules. Tax avoidance is often better through professional bodies since they are insuring me against a possible backfire.


    I have the same issues regarding exceedance of the pensions AA and LTA each year and I employ a tax accountant to work it out for me, so complex are the rules for the layman.
    Last edited by Mutton Geoff; 28-10-2017 at 2:31 PM.
    Compensations/Refunds from Banks & Institutions - £4,165 | Stooz Profits - £7,636 | Quidco - £4,014

    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • kinger101
    • By kinger101 28th Oct 17, 2:16 PM
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    kinger101
    The property has one numerical address and that it what is on the title. There is access to two courtyards from the road. One is vehicular, one is pedestrian. Both provide access to the individual front and back doors of the properties. The property is one single cohesive building that has been joined then divided again in the past (50-100 years ago). One part is a 4 bedroom, 3 bathroom house and subservient to that is a one bed/one bath attached "cottage".


    The cottage is subservient to the main house and is a smaller fraction of sq footage.


    The tax treatment is not clear which is why a specialist has been contacted for a quote. I am looking for other quotes and advice, here because of my respect for the specialist knowledge of many contributors on this forum, and of my regular tax accountant (awaiting response). Of course I shall ring HMRC but this is difficult using SIP phones or Skype. I will be able to call them on Monday but was hoping to elicit a technical reply here that would assist me in dealing with them.


    The potential return is high enough for me to warrant paying for professional advice rather than risk losing it because I happen upon a clerk at HMRC who is not intimate with the rules. Tax avoidance is often better through professional bodies since they are insuring me against a possible backfire.


    I have the same issues regarding exceedance of the pensions AA and LTA each year and I employ a tax accountant to work it out for me, so complex are the rules for the layman.
    Originally posted by Mutton Geoff
    From what you've said, it seems as though the granny annex rule would apply, but the taxation professional would be in a better position to advise to what extent you'd need to demonstrate this.

    I don't think what you're doing is tax avoidance. That term really applies when someone operates within the law, but in a way Parliament did not intend. Really, it would fall under "tax planning". Decided whether to apply MBR for your particular circumstances. You have no obligation to maximize the amount of tax you pay.
    • 00ec25
    • By 00ec25 28th Oct 17, 5:29 PM
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    00ec25
    I was under the impression OP was implying that one of the properties satisfied the two-thirds/same grounds criteria for the higher rate, but I'm not sure how the "granny-flat" exemption interacts with MDR.

    Depending on exactly how the legislation is worded, it might be possible to obtain both exemptions.

    Would be useful if OP could clarify.
    Originally posted by kinger101
    OK, so given the clarification now posted by OP, yes I agree the subsidiary dwelling rule appears to be met "2.10B In certain cases a purchase of more than one dwelling will be treated the same as if a single dwelling had been purchased. This is the case if any of the dwellings purchased are subsidiary dwellings. A subsidiary dwelling must be within the same building as or in the grounds of another dwelling purchased in the same transaction (the principal dwelling). The principal dwelling and the garden and grounds attributable to that principal dwelling must be at least two thirds of the value of the land purchased in the transaction"
    • Mutton Geoff
    • By Mutton Geoff 28th Oct 17, 6:24 PM
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    Mutton Geoff
    One of the issues I think is that the title is for a single property though that has been divided. I'll keep everyone posted in case others have this experience.
    Compensations/Refunds from Banks & Institutions - £4,165 | Stooz Profits - £7,636 | Quidco - £4,014

    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • davidmcn
    • By davidmcn 28th Oct 17, 6:36 PM
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    davidmcn
    One of the issues I think is that the title is for a single property though that has been divided.
    Originally posted by Mutton Geoff
    Why is that relevant? It's the number of properties which matters, not how they're registered.
    • Mutton Geoff
    • By Mutton Geoff 28th Oct 17, 8:39 PM
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    • 1,042 Thanks
    Mutton Geoff
    Why is that relevant? It's the number of properties which matters, not how they're registered.
    Originally posted by davidmcn

    Thank you for that. I was incorrectly viewing the land registry document as a sort of "receipt" for the number of items I was purchasing.
    Compensations/Refunds from Banks & Institutions - £4,165 | Stooz Profits - £7,636 | Quidco - £4,014

    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • Dangerous48
    • By Dangerous48 30th Nov 17, 5:29 PM
    • 1 Posts
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    Dangerous48
    Hi I am trying to do the same. I have rung HMRC, but they were not that forthcoming and only suggested I apply and they would decide. I have sent off for the form, hopefully it is the right one!! I am going to complete, return, cross my fingers and hold my breath.
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