Multiple Dwellings relief changes from Kwasi Kwarteng in the 2022 mini-budget Growth Plan Stamp Duty on buy to let properties SDLT Returns Residential SDLT calculator SDLT for first time buyers relief calculator Stamp Duty Second Homes Multiple Dwellings Relief (MDR) SDLT for Property Developers Stamp Duty & Limited Companies Stamp Duty Refunds There have been several changes to UK Multiple Dwellings Relief (MDR). These changes came about because of the Growth Plan and Kwasi Kwarteng on 23rd September 2022. One of the changes to tax made by Kwasi Kwarteng was MDR & Stamp Duty. These changes were announced in the mini-budget. Kwasi Kwarteng’s idea is to stimulate the housing market and the economy at large. MDR was changed from 23rd September 2022 and was effective as of that date. 0% Stamp Duty rate for property under £125,000 was increased to £250,000. All other rates apply as normal. Please note that there was no change to the 3% SDLT surcharge for any residential property purchased over £40,000. There was no change to the 2% foreign surcharge either. Use our Stamp Duty tax calculator to check how much you need to pay. The Stamp Duty calculator will not be able to show you how Multiple dwellings Relief is calculated. This is because the calculator focuses on just one property. Claiming a refund on Multiple Dwellings Relief (MDR) savings Anybody acquiring mixed-use multiple dwellings should be able to reclaim overpaid SDLT for the last four years (and probably back to April 2016) due to MDR. The criteria for claiming Multiple Dwellings Relief (MDR) are: – they claimed multiple dwellings relief but paid at the wrong rate or – that they didn’t claim multiple dwellings relief because to have done so would have led to them paying more tax based on the old HMRC guidance Clients who have acquired permitted development conversion or buildings with planning permission for conversion (including works of substantial demolition) who paid commercial rates are eligible for multiple dwellings relief on those site acquisitions. Clients who purchased Greenfield sites, i.e. bare land, should be able to claim multiple dwellings relief (MDR). We see far too many landlords overpay SDLT as they have not benefitted from claiming MDR. Ensure you work out how to identify whether a Stamp Duty relief claim may be made with HMRC using our tax specialists to work out the MDR amounts. You can use the money saved by claiming Multiple dwellings Relief (MDR) on your next buy-to-let deposit. Stamp Duty Land Tax when buying a residential buy to let investment You pay Stamp Duty Land Tax to HMRC within 14 days of buying a residential property. It would help to consider many SDLT rates when purchasing a buy to let as a property investor. You may also be a developer looking at ways of minimising stamp duty land tax on a flip. We will focus our efforts on Multiple Dwellings Relief, MDR, to reduce your SDLT liability when buying your next house. Claim SDLT relief for Multiple Dwellings Relief (MDR) Do you pay stamp duty on buy to let? UK landlords will need to pay stamp duty on their buy-to-let purchase, but many reliefs are available. Multiple Dwellings Relief (MDR) is an opportunity to reduce SDLT when purchasing a residential buy-to-let. You must buy two or more properties from the same vendor to claim an MDR discount. This is commonly known as a linked transaction. There is a linked transaction as multiple land transactions occur with the same buyer/seller. Many of our clients buy many properties simultaneously to claim MDR and reduce SDLT. HMRC defines a linked transaction as “When two or more dwellings are acquired together involving the same buyer and seller, they count as ‘linked’ for SDLT. HMRC may count people connected to a buyer or seller as the same buyer or seller”. This is where Multiple Dwellings Relief comes into effect, as landlords can claim MDR because it is a linked transaction. HM Revenue Customs counts transactions as linked if: – there’s more than one transaction – the transactions are between the same buyer and seller or between people connected with either of them – the transactions are part of a single arrangement or scheme or part of a series of transactions Recently there have been some changes to the SDLT for MDR and the 3% SDLT additional rate. These changes have been put in place by the HMRC or the Her Majesty’s Revenue and Customs, which collects revenue on behalf of the UK government. The new changes, which were rewritten in April 2020, state that the SDLT 3% higher rules do not apply to mixed properties. They have been rewritten to reflect that the 3% higher SDLT will not affect you if you own a buy-to-let investment with residential and non-residential elements. You can also still use Multiple dwelling relief (MDR) to decrease the tax burden of the property, which has a residential element. Let us look at an example to see how Stamp Duty Land Tax and, in particular, the 3% SDLT additional rate may be significantly reduced by Landlords. The claim of Multiple Dwellings relief is not simple, as you need to convince a conveyance solicitor, which is never easy. Using a stamp duty tax specialist will help in this situation. Multiple Dwellings Relief example £700,000 purchase value of a buy-to-let investment. We do not know too much as the property apart from it has a few ASTs in place with tenants. The solicitor may therefore assume, incorrectly, that the investment is residential. The Stamp Duty Land Tax (SDLT) is calculated by the solicitor as follows £22,500 SDLT based rate £21,000 3% SDLT higher rate (3% of £700,000) £43,500 total SDLT liability when purchasing a residential buy-to-let valued at £350,000. Looking further into the investment, we understand that the buy-to-let has five bedsits. The property is all on one title. Nevertheless, the five bedsits qualify for Multiple Dwellings Relief (MDR). Each bedsit has an individual value of £140,000. The £140,000 buy-to-let value is less than £250,000, so no SDLT banded rate will apply. The 0% SDLT rate was changed from £125,000 to £250,000 by Kwasi Kwarteng’s mini-budget announcement on Friday, 23rd September, as part of the 2022 Growth Plan. We can now revise the Stamp Duty Multiple Dwellings Relief (MDR) calculator workings: £7,000 SDLT-based rate (please note that there is a 1% minimum charge on the investment value) £21,000 3% SDLT higher rate (3% of £700,000) £28,000 Total SDLT liability – SDLT banded rate and 3% SDLT higher rate In this case, there is a significant saving for the landlord. Conveyance solicitors will not tell landlords about MDR. This is why HMRC benefit from significant amounts of SDLT overpayments. Work with your solicitor and tax specialist to claim your MDR to save SDLT on your next purchase.