When buying two properties or more in a single or linked transaction, it’s currently possible to reduce the overall rate of Stamp Duty Land Tax (SDLT) through multiple dwellings relief.
This is a bulk purchase tax relief that allows the buyer to pay SDLT on the average price of each of the dwellings, so they can benefit from lower SDLT
bands.
However, from 1st June 2024, the UK government will abolish multiple dwellings relief for SDLT to avoid disputes over questionable claims, particularly whether ‘granny annexes’ qualify.
This will impact buyers who purchase multiple properties in single or linked transactions from June 2024.
Multiple dwellings relief abolished
The abolition of multiple dwellings relief will affect investors and property owners engaged in multiple property transactions, with each dwelling now subject to assessment individually.
Unfortunately, this means that even genuine claims will now lose SDLT relief, such as country homes with cottages in the grounds, or town houses with basement flats.
For example, from June, a property with an annexe costing £750,000 would be liable for double the SDLT previously payable – increasing from £12,500
to £25,000.
As the removal of this relief was announced on 6th March 2024, it will still be available for transactions where the buyer entered into the contract on or before this date, even if completion takes place after 1st June.
Otherwise, this SDLT relief is only available if a purchase completes or substantially performs before the date that the abolition comes into effect.
It’s important to be wary that some companies may contact buyers offering to claim back their SDLT in return for a commission, but these SDLT refunds are usually based on questionable relief entitlement.
Speak to a tax consultant about SDLT
The removal of SDLT multiple dwellings relief shouldn’t affect most properties that are single-property transactions, but if you need more information, the government’s guide to Stamp Duty Land Tax relief is available online.
If you would rather seek tailored advice from professional accountants in Barnsley, why not make use of our tax consultancy services at gbac?
Simply contact us by phone or email to find out what we can do for you.