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Closing A Stamp Duty Land Tax Loophole

Regarding mixed property purchases ...

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Posted by Helen Beaumont on 08/12/2021 @ 8:00AM

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 ...

HMRC is consulting on how to close this Stamp Duty Land Tax loophole!

HMRC is consulting on how to close this Stamp Duty Land Tax loophole!

copyright: maxxyustas / 123rf

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.

"A purchaser of the mixed property pays less
Stamp Duty Land Tax!"

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 whereby 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.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about Stamp Duty Land Tax on mixed-use property purchases, it may be a great idea to give me a call on 01908 774323 and let's see how I can help you.

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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.