Why Didn't The Annexe Qualify As A Separate Dwelling?
Multiple Dwellings Relief did not apply ...
Posted by Helen Beaumont on 26/05/2021 @ 8:00AM
In a recent SDLT case, the question of whether a six-bedroom home consisting of both the main home and separate annexe should be treated as one for the purpose of Multiple Dwellings Relief (MDR) was considered ...
Sometimes annexes qualify for Multiple Dwellings Relief, but sometimes they don't!
The case came about because an individual bought a property and filed their Stamp Duty Land Tax return on the basis that the property did not qualify for Multiple Dwellings Relief. They later amended the return to claim the relief, stating that the property was made up of the main house and a separate annexe.
"Of course, HMRC refused the claim so the owner appealed!"
He stated that the property had been sold to him as a six-bedroom residential property and the floor plan showed that the annexe made up part of the ground floor. It had its own bathroom, utility room and an entrance hall.
Entry to the annexe could be made from the main property, but the First-Tier Tribunal agreed that some features of this annexe made it suitable to be used as a single dwelling because it contained everything someone would need to live there.
However, because access to the annexe could be made from the main property via non-lockable doors, overall, the annexe could not be treated as a separate dwelling. Other factors that counted against it included the inability to move from the annexe's own utility room to the bedroom directly without going through the main property.
"And there were no separate feeds for the water, heating or electricity!"
So, in the end, the First-Tier Tribunal agreed with HMRC and denied the appeal, saying that without a lot of significant changes, the annexe could not be treated as a separate dwelling.
Until next time ...
HELEN BEAUMONT
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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.
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