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If a purchased a block of 5 flats on one title would Multiple Dwelling Relief apply?
If so say if purchase price was £250k what SDLT would be payable?
Yes it would, if they are self contained.
SDLT would be 3% of total price if extra 3% rate applies and 1% if not.
Director of Tax Peplows Limited
CTA ACA FCCA
Have you got a breakdown?
Where the relief is claimed, the rate of SDLT which applies to the consideration attributable to interests in dwellings is determined by reference to the amount of this consideration, divided by the number of dwellings (i.e. the mean consideration attributable to the dwellings). This is subject to a minimum rate of 1%.
The freehold of a new block of 20 flats is purchased for £2.5 million. There is no headlease and none of the flats is subject to a long lease.
The transaction is a relevant transaction for the purposes of the relief as it involves the acquisition of more than one dwelling - i.e. the 20 flats. The freehold is treated as if it were interests in the individual dwellings. The chargeable consideration divided by the number of dwellings is £125,000. This is below the normal 0% SDLT threshold but the minimum rate of tax under the relief is 1%.
The tax due is therefore 1% of £2.5 million = £25,000.
The freehold of a block of 10 flats is purchased for £1.4 million. There is no headlease but five flats are let on 99-year leases.
The transaction is a relevant transaction for the purposes of the relief as it involves the acquisition of more than one dwelling - i.e. the five untenanted flats. The freehold is treated as if it were interests in the individual dwellings. The chargeable consideration is apportioned between the five untenanted flats (£1,250,000) and the five tenanted flats (£150,000).
The rate of tax on the consideration attributed to the untenanted flats is set by the amount of that consideration divided by the number of dwellings concerned. This is £250,000 so the rate of tax is 1%. The tax due in respect of these flats is therefore 1% of £1,250,000 = £12,500.
The rate of tax on the consideration attributed to the tenanted flats is set by the chargeable consideration for the transaction (£1.4 million). As the transaction involves six or more dwellings, it is treated as involving non-residential property so the rate of tax is 4%. The tax due in respect of these flats is therefore 4% of £150,000 = £6,000.
The total tax due on the transaction is therefore £12,500+£6,000 = £18,500.
Simon Misiewicz | Business Development Manager
Telephone: 0115 939 4606
Can i put another one to you.i am considering purchasing a mixed commercial freehold property for £1,250,000 which consists of a tenanted shop with a short lease and 3 flats sold off on long leases.How would the SDLT be calculated ?
£250,000/5 = £50000 at min of 1% (below £125k) = £500 x 5 = £2,500
or if extra 3% applies
£250,000/5 = £50,000 at 3% (over £40k but below £125k) = £1,500 x 5 = £7,500
Thanks for that; what if purchase price was £300k?
Would still be either 1% or 3% of total
Sorry last one, what if £350k purchase price as an additional property?