For a number of years now, the purchaser of multiple dwellings has been able to potentially benefit from a reduced rate of Stamp Duty Land Tax. If someone was buying four flats in a building at £1.2m they would be entitled to pay SDLT at a rate of 3% on the £1.2m (since that was the rate that attached to the average flat price of £300,000). One of the rationale behind this relief was to ensure that purchasers were not disadvantaged by the “slab” effect of the different tiers of duty.
Now that slab rates have disappeared in favour of marginal rates (where you only pay duty on that part of the price that actually falls within a particular band) we have been asked whether multiple dwelling relief is still available. The answer is “yes”.
It would, of course, be too much to ask for the HMRC stamp duty land tax manual to be bought up to date, but if you do trawl through the documentation released last week you will find at page 12 of the document linked below, the detailed answer.
Using the £1.2m four dwelling example above, the purchase would have attracted duty of £36,000 under the old system.
Under the new system, what we now do is work out the average price (i.e. £300,000), calculate the duty that would be due on that flat (£5,000), and multiply that by the number of flats. This example gives rise to duty of £20,000 (a saving of £16,000 against the old system).
As with any tax, the devil is in the detail and you should consult the detail of the guidance rather than rely on this note alone. One of our experienced property lawyers would always be pleased to assist with any queries that you have.