A recent high-profile appeal involved Stamp Duty Land Tax (SDLT) and the eligibility for Multiple Dwellings Relief (MDR) on the acquisition of a residential property for £1.8 million. The appellant asserted that the property comprised two dwellings and was eligible for MDR, while HMRC argued it is a single dwelling.
The Issue and the Law on Multiple Dwellings Relief
The property in question has two distinct areas of accommodation, referred to as “dwelling 1” and “dwelling 2.” Dwelling 1 was unoccupied and had one bedroom, living/dining area, kitchen, bathroom, and separate entrances. Dwelling 2 was where the taxpayer’s family lived, with four bedrooms, two bathrooms, living areas, and separate entrances. The two dwellings were originally one unit but were separated by sound and fireproof doors. They shared an oil-fired boiler for heating, separate thermostats, and separate water supplies. Despite some separate utilities, the property had a single council tax account and postal address.
To determine whether the Property qualifies as multiple dwellings, the Tribunal considered the facts and evidence of the case in accordance with the legislative framework for SDLT in the Finance Act 2003 as well as the leading authority in case law, Fiander and Brower v HMRC [2021] UKUT 0156.
The Tribunal explained that the statutory test requires an assessment of whether each dwelling is used or suitable for use as a single dwelling. The assessment must consider the basic living needs of occupants, including privacy, self-sufficiency, and security.
The evaluation is multifactorial, taking into account all relevant facts and circumstances. The physical configuration and facilities of the dwellings play a significant role in determining suitability. While shared utilities and other factors are considered, they do not outweigh the overall assessment of each dwelling’s ability to function independently as a single unit. In this case, it is concluded that both dwelling 1 and dwelling 2 are suitable for use as single dwellings, qualifying for MDR benefits.
The Conclusion and the Significance
The decision concludes that the appellant benefits from Multiple Dwellings Relief, and emphasises the need for a multi-factorial assessment to determine the suitability of the property as a single dwelling.
This is significant as there have been numerous instances where claims for multiple dwellings relief have been unsuccessful, making it surprising to discover a case where the taxpayer achieved success. This highlights the validity of the relief and emphasises that, under suitable conditions, taxpayers could avail themselves of its benefits before its complete abolition on 1 June 2024.
The judgment was published on 7 August 2024.
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