Changes to Stamp Duty Land Tax (SDLT)

Changes to Stamp Duty Land Tax Relief (SDLT), what’s changed?

Following the Chancellor’s announcement in his Spring Budget, 1 June 2024 signaled the end of a valuable and popular form of Stamp Duty Land Tax (SDLT) relief for property investors and developers as well as individuals purchasing homes with annexes or cottages on the grounds.

By applying Multiple Dwellings Relief (MDR), buyers of two or more properties could opt to calculate the SDLT payable based on the average price of the properties acquired rather than the total price for all properties, resulting in a lower, overall tax burden.

We asked Gavin James, our Private Client Tax Manager to tell us about the changes to SDLT and who and how these changes will impact upon UK taxpayers.

Who will be affected by the changes to Stamp Duty Land Tax?

Those impacted the most by the removal of MDR will be property investors and developers acquiring two to five properties who will now have to pay residential rates of SDLT on the total price paid.

Historically, with the application of MDR, a buyer of four flats for £350,000 each would have paid SDLT of £62,000 – an effective rate of 4.4%. From 1 June 2024, the same transaction will attract a SDLT charge of £123,250 – an effective rate of 8.8%.

For investors and developers who have the means to stretch to the purchase of six properties, they can still benefit from being able to apply the lower, non-residential rates of SDLT to the transaction.

Multiple Dwellings Relief, the rules

MDR will not be applicable to contracts with an effective date on or after 1 June 2024. There are, however, some exceptions to this. The relief will apply where the transaction has been substantially performed already before 1 June 2024, and where the transaction falls within a contract entered into before 6 March 2024 and there has been no variation of that contract after 6 March 2024.

The change in legislation applies to purchases of multiple dwellings in single transactions and linked transactions.  You can read more about the changes to SDLT on the HMRC website.

Stamp Duty Land Tax (SDLT)) is a complex area of tax and we would always recommend that you seek professional advice before acting or refraining from acting.  If you require assistance or advice in respect of property tax matters, the RPGCC tax team are here to help. You can contact us on 020 7870 9050 or email us and a member of our team will get back to you as soon as they are able.

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