Posted 14th February 2022 by ctatax-admin
With all the talk since last summer about the chancellor’s Stamp Duty ‘holiday’ and its impact on the UK housing market through the testing periods of Lockdown, it’s possible that Stamp Duty (or Stamp Duty Land Tax, to give it its proper title) has never been more in the public eye than it is right now. And yet still, the understanding of the public (and even the property profession itself) of SDLT, how it works, and what amounts are payable is still fairly superficial at best.
One of the biggest issues in SDLT at the moment relates to Multiple Dwellings Relief or MDR. This has been somewhat of a controversial topic in recent times, with Law firms seeing growing numbers of claims made against their property departments for ‘missed’ MDR claims on purchases for which they have acted. These allegedly missed claims sometimes equate to tens of thousands of pounds in overpaid SDLT, meaning it’s no wonder that people are starting to question their lawyers on the subject.
But what is MDR? How is it claimable and might you have already missed an eligible claim for it?
First of all, MDR was introduced in 2011, primarily as an encouragement to property development and investment. In broad terms, it does this by working the tax out on the average value for the properties in a transaction where multiple dwellings are involved. Normally, when purchasing a property, the SDLT due is calculated based on the total purchase price of the property.
Where someone is purchasing multiple dwellings – for example, a private landlord buying several flats in the same block – MDR comes into effect, essentially calculating an average purchase price for all the dwellings involved in the purchase and then calculating SDLT using that average value for working out the SDLT for each property. This obviously means that in transactions which involve properties of significantly different value especially, the level of SDLT due may be significantly reduced.
If you have purchased multiple dwellings and are not aware that an MDR claim was made at the time, you may still be able to get the SDLT Return amended and thereby reclaim the difference in SDLT directly from HMRC. We specialise in precisely this sort of reclaim, assessing whether there is a valid claim to the relief, preparing the necessary paperwork for submission to HRC together with a detailed explanation as to why we feel the original return was incorrect and what needs to be amended. We operate this service on a no-win, no fee basis, meaning that if we are unable to get your money refunded by HRC, you won’t have paid a penny for our services.
If your purchase was made too long ago to amend the return, there may still be scope to speak with your solicitor about what may be done to reimburse you for the losses made, and we are also happy to help with this.
If you are buying a property now which may be subject to MDR (including a property with a self-contained annexe like a ‘granny flat) and would like to see whether MDR may be applicable, then we are more than happy to make an initial, rapid assessment and advise accordingly, working with you and your solicitor to make sure you pay only what you owe.