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Minimising Stamp Duty Land Tax – part 1

Minimising Stamp Duty Land Tax – part 1

Jennifer Adams from Tax Insider, reveals how to minimise Stamp Duty Land Tax using Multiple Dwellings Relief. 

Multiple Dwellings Relief

Stamp Duty Land Tax (SDLT) is charged whenever a transaction involving land takes place, however effected. It is levied as a percentage of the amount paid where the amount is above a certain threshold.

It is a ‘stepped’ tax: the rate increases on the whole of the purchase price at certain thresholds.

Multiple dwellings relief allows a rate to be charged at the percentage payable on the ‘average property’ price should more than one property be purchased at one time, rather than on the total consideration.

Note: the minimum ratecharged is 1%; therefore it is not beneficial to claim this relief for properties valued at under £250,000 – the usual SDLT rate limit.

Eg: Ben wants to buy flats being offered at a significant discount for bulk purchase. Four flats will cost £200,000 each plus a penthouse flat at

£300,000.

Without claiming multiple dwellings relief the SDLT charge would be 5% on the full purchase price of £1.1m, i.e. £55,000. With claiming the relief he pays 1% on the total consideration as the average price is £220,000 – only £11,000, resulting in a tax saving of £44,000.

For more information and tax tips look to our recent articles, www.martinco.com/news.