Autumn 2022

LEGAL ADVICE
Ask our
Friendly
Experts
Saving on stamp duty
QIs there a way to reduce
the Stamp Duty when
I’m buying a house?
ASince October 2021,
buying residential property
at a price over £125,000
attracts a payment of Stamp Duty
Land Transaction Tax to HMRC.
Given that this tax starts at a
rate of 2% of the purchase price
over the £125,000 level, with
increasing percentages becoming
payable the higher the purchase
price – the biggest being 12%
for any portion of the purchase
price over a £1.5 million, this is
a substantial additional cost for
most home buyers.
It is obviously therefore in
buyers’ interests to reduce this
large payment if possible. One
such way to reduce this Stamp
Duty Land Transaction Tax
payment would be for a buyer
to claim Multiple Dwellings
Relief should the property being
purchased qualify. In order
to qualify, the property being
purchased must include more
than one residential dwelling.
In relation to Stamp Duty and
following various case law,
the definition of “dwelling” is
generally and widely accepted
as being a building or part of a
building which is capable of being
a separate unit, which includes
the facilities to accommodate
all of a person’s basic living
needs, so that a person can live
in that unit exclusively without
the need to go to an alternative
building to, for example, have a
shower or eat a meal. These basic
facilities are therefore to include
a bedroom or an area for sleeping
which can also include a living
area, as well as a bathroom and
kitchen facilities. In addition,
the further dwelling or annexe
should have its own independent
and lockable access, water supply,
boiler, heating system, fuse box
and other utility supplies.
Under Schedule 6B of the
Finance Act 2003, the law also
states that “a building or part of
a building counts as a dwelling
if… “it is in the process of being
constructed or adapted for such”.
This would therefore mean that
the Multiple Dwelling Relief
can also be claimed even where
the additional building is in the
middle of being built or is not
already established and in use
as a separate dwelling so long
as it will eventually be able to
be used as such a separate and
independent home.
QBut how much Stamp
Duty Land Transaction
Tax will claiming this
relief actually save a buyer?
AIn order to work this out,
rather than calculating
the amount of Stamp Duty
Land Transaction Tax payable
on the whole of the purchase
price, the purchase price is
firstly divided by the number of
dwellings on site, i.e. halved if
there are two separate dwellings
being purchased. The amount of
Stamp Duty Land Transaction
38 The Cake • Autumn 2022