My VIP Tax Team question of the week: SDLT: mixed-use, multiple-dwellings relief and the additional 3% rate for dwellings
My client is acquiring a freehold mixed-use building in England, consisting-of commercial premises on the ground floor and two separate, self-contained flats above, each with their own independent external access. We consider that the flats do constitute separate dwellings for stamp duty land tax (SDLT) purposes.

We understand that the default SDLT position would be based on “non-residential” rates for a “mixed” property, but with an alternative calculation available based on a claim for multiple dwellings relief (“MDR”) in respect of the two dwellings.

If my client does claim MDR, can you confirm the SDLT rates that would apply: specifically, whether this includes additional 3% residential rates? We understand there has been a recent change of view by HMRC in this area.

The building purchase price is £850,000 and the two residential units are valued at £200,000 each.


1. The default calculation

SDLT on the acquisition of mixed business/residential use property applies the same rates and bands for a fully commercial property (s.55, FA 2003), with the SDLT payable by your client as follows:

Total consideration                         £850,000

First £150,000 @ 0%                      £0

Next £100,000 @ 2%                     £2,000

Balance (£600,000) @ 5%             £30,000

Total SDLT                                    £32,000

2. Claim for MDR

A claim for MDR in respect of the dwellings requires the residential SDLT rates to be applied to the “consideration attributable to the dwellings” (paras 4 and 5, Sch. 6B, FA 2003).  Previously, HMRC’s view was that this would also require the application of the higher 3% rates due for additional dwellings (Sch. 4ZA FA 2003), however they published a change of view on this issue in November 2020 in their SDLT manual as follows:

“The following transactions will not comprise higher rates transactions and the higher rates will not apply. Purchases of: –

  • non-residential or mixed residential and non-residential properties, except for a transaction which incorporates more than one dwelling, when
  1. a ‘Multiple Dwellings Relief’ claim is made in respect of the residential element of the transaction, and
  2. the non-residential element of the transaction is negligible or artificially contrived”


On this basis, the SDLT due in respect of the two flats, using MDR, would be calculated as follows:

(Consideration attributable to dwellings: £400,000)

SDLT for each dwelling:

Consideration £200,000 each

First £125,000 @ 0%                                    £0

Next £75,000 @ 2%                                     £1500

SDLT with MDR (for both flats)                 £3000

SDLT is payable on the remaining consideration for the commercial part as a fraction of the total payable for the whole building (calculated above) as follows:

£32,000 x (£450,000/£850,000) = £16,941.

The SDLT payable on the entire property under MDR is therefore £19,941 (giving a net saving with MDR of £15,059, compared with the default calculation above).

Stamp Duty Land Tax applies to acquisitions of property in England and Northern Ireland; similar statutory rules apply for Land Transaction Tax in Wales; in Scotland, the additional dwelling rate (ADS) applies specifically to the consideration for the residential part(s) of a mixed acquisition and the above advice would therefore not be relevant to purchases under Scottish Land and Buildings Transaction Tax (LBTT).  

Following a recent consultation, HMRC are currently considering possible reforms of the SDLT regime concerning the issues discussed above, for possible future implementation. You can read further about this here –


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Tax Advice Consultant
0844 892 2470

Roger spent 14 years with the Inland Revenue followed by several years working in the tax department of an accountancy practice. Roger is a member of the Association of Taxation Technicians and, as well as advising on all areas of direct tax, he specialises in Stamp Duty Land Tax.

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