HMRC published a consultation on the 30th of November 2021 proposing changes to a couple of areas of the Stamp Duty Land Tax (SDLT) regime. They are requesting views on mixed-use property purchases and Multiple Dwellings Relief ...
A mixed-use property purchase has both residential and non-residential property involved. This could range from a country house with a bed and breakfast, pub or grazing land included to a high street fast-food outlet with a residential flat above it.
Normally, purchasers of mixed-use property must pay non-residential SDLT which are currently lower than purely residential rates. The non-residential rate is 5% compared with a maximum of 17% for residential.
And that's a loophole that HMRC wants to fill because a massive country estate with just a pub somewhere on the land means a huge loss of income from SDLT when the purchaser only pays 5% instead of the maximum of 17%.
So, HMRC wants this consultation to come up with ways to offer greater fairness and reduce the number of incorrect claims and possible abuse of the current policy. This will involve something called apportionment.
Using an apportionment method to calculate SDLT would mean the residential portion of any mixed-use property purchase would be taxed as residential and the non-residential part taxed as non-residential. This would match SDLT with the Land and Buildings Transaction Tax (LBTT) in Scotland.
With a property including six or more actual dwellings, the purchaser will be able to pay non-residential Stamp Duty Land Tax on the whole, unless they choose to claim Multiple Dwellings Relief!
However, HMRC understands that any apportionment methods could be appealed, so they are thinking about introducing thresholds whereas a percentage of residential and non-residential is considered instead. This is all included in the Stamp Duty Land Tax consultation.
I'll blog about this again once I know more.
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