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Hi, can anyone recommend a conveyancing solicitor that understands and has dealt with "Multiple Dwelling relief (FA2003/Schedule 6B)".
The 'relief' is something that i am looking to take advantage of and from everything i have read there doesn't appear to be many conveyancers out there that have experience of this - im not concerned with location, so would welcome any suggestions and even better if you have used them for the same thing....
Unfortunately most Solicitors miss it. You are legally responsible for the SDLT return and payment of the tax due so insist that the relief is claimed.
Value of each dwelling not relevant you just divide the consideration by the number of dwellings.
Director of Tax Peplows Limited
CTA ACA FCCA
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
I recently went through all of this with a purchase in Scotland which included ADS relief as I was buying 6x flats in one transaction. The total deal value was £320k (so £53,333.33 a flat on average). Took me a lot of reading but this is what I got to with it:
I've put my commentary in bold so it flows better. I found this example on the revenue Scotland page:
Electronic Limited are purchasing a house split into 8 flats in one transaction for £800,000. The company does not own any other dwellings. As the house has been split into 8 parts, each of which can be used as a single dwelling, at the end of the day that is the effective date for the transaction, the company owns 8 dwellings.
The ADS applies to every purchase of a dwelling in Scotland by a company.
However, as 100% relief from ADS is available for any transaction in which a buyer purchases six or more residential properties in that one transaction, the ADS will not apply to the company's purchase if relief is claimed because the transaction involves the purchase of 6 or more dwellings in one transaction. Electronic Limited will however pay ‘standard’ LBTT at non-residential rates based on the total consideration for the 8 flats.
The company may also claim MDR. To calculate the LBTT payable if MDR was claimed, see part LBTT3015 of the guidance.
6 April 2016
If you then go to the MDR page it is correct that’s its then viewed as commercial but you can work them all out individually (dividing the total consideration by the number of dwellings) which gives us an average of £53,333 per flat which falls into the zero rating commercial band. Txt here:
This relief is provided by the provisions of schedule 5 to the LBTT(S)A 2013 (as amended).
Worked examples on multiple dwellings relief are provided separately on our website under ‘LBTT Worked Examples’.
Description of relief
This is a form of partial relief from LBTT which ensures that where a taxpayer is buying multiple dwellings in a single transaction, the taxpayer is not taxed at a higher tax band when the transaction involves dwellings which, if bought separately, would fall into a lower tax band. This partial relief ensures that in all cases, a prescribed minimum amount of tax is paid on land transactions involving the acquisition of multiple dwellings.
The definition of a ‘residential property’ is set out in LBTT(S)A 2013 section 59.
The relief applies where the transaction includes 2 or more dwellings or 2 or more dwellings and other property. The relief also applies to linked transactions where a transaction involves a single dwelling and it is linked to one of a number of transactions and the main subject matter of at least one of the other transactions involves some other dwelling or dwellings or some other dwelling or dwellings and other property. The relief does not apply to land transactions which are leases for the purposes of schedule 19 to the LBTT(S)A 2013.
LBTT(S)A 2013 schedule 5 part 2
The relief does not apply where crofting community right to buy relief is available, or where group relief, reconstruction relief, acquisition relief, or charities relief is available or has been withdrawn.
LBTT(S)A 2013 schedule 5 paragraph 6
The Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016 has amended the calculation of multiple dwellings relief for cases where Additional Dwelling Supplement applies.
Please note that there is no change to the calculation where relief from ADS for purchases of six or more dwellings is claimed (see LBTT10040).
Multiple Dwellings Relief - no ADS payable
Relief mechanism - the amount of tax due
The amount of tax due on a transaction involving multiple dwellings is calculated by multiplying the tax due in relation to a dwelling (DT) by the number of dwellings (ND), then adding the tax due on any other property (RT).
i.e. The amount of tax due = (DT x ND) + RT
LBTT(S) A 2013 schedule 5 paragraph 10
Tax due in relation to dwellings (DT)
To calculate the tax due in relation to a dwelling (DT), firstly calculate the total consideration attributable to dwellings (or if it is a linked transaction, add the consideration attributable to dwellings to the consideration attributable to dwellings for all other relevant transactions).
Then divide the total consideration attributable to dwellings by the total number of dwellings. This gives you the average consideration for all the dwellings.
Then calculate the tax due for that average consideration using the tax rates and bands for residential property (see LBTT4009), assuming the transaction is not a linked transaction. Tax rates and bands for residential property are used for calculating the tax due subject to the relief regardless of how many dwellings are being acquired.
This sum is then multiplied by the number of dwellings (ND) that are, or form part of, the transaction. This gives the total amount of tax payable for the dwelling element of the transaction.
If you read on under the MDR there is a minimum prescribed amount of 25% of the total amount of tax chargeable in absence of the relief (which would be the £4,500) so therefore we get away with paying £1,125
Link here: https://www.revenue.scot/land-buildings-...0/lbtt3015
so basically I got full ADS relief (as buying 6 properties in one go) and then the multiple dwelling relief meant you then have to value the deal on a commercial basis and pay the minimum prescribed 25% of what you would be due without MDR so I had to pay £1,125 but without the reliefs I would have had to pay £12,800. Hope that helps and happy for anyone to point out if I have made a mistake!