Recently released figures from Cornerstone Tax 2020 – the UK’s leading property tax specialists – reveal the firm has returned to homeowners across the UK a staggering £7.6m (£7,662,310.56) in overpaid stamp duty in relation to cases surrounding multiple dwellings relief.
In England alone, there are currently 24.2 million households with registered multiple dwellings on their properties according to the English Housing Survey.
Alarmingly, many homeowners may have overpaid on stamp duty due to errors in the dwellings’ status, with Cornerstone Tax 2020 finding the average loss sits at a staggering £34,987.72.
What is Multiple Dwelling Relief?
Introduced in 2011, Multiple Dwellings Relief (MDR) is a tax relief or exemption provided in the United Kingdom, to reduce the amount of stamp duty or land tax payable when purchasing multiple residential properties in a single transaction.
This relief is aimed at encouraging the acquisition of multiple properties, such as a block of flats, and can result in substantial savings on the overall tax liability. It is designed to support property investors and developers by making it more financially viable to acquire multiple dwellings in one go rather than as separate transactions.
In the UK, Multiple Dwellings Relief (MDR) can be overcharged in certain situations, particularly when the conditions for claiming the relief are not met or when there are errors or misunderstandings in the application process. Where the property isn’t immediately obviously subject to MDR (blocks of flats for example), other factors become relevant. At the top end of the market, larger houses with multiple smaller cottages or flats in the grounds, etc will potentially qualify for example. At the lower end of the market, homeowners must look carefully at the property itself. Does the annexe have its own lockable entrance? Does it come with its own separate bathroom and kitchen? Is it, in effect, a separate dwelling from the main home?
Cornerstone Tax 2020’s findings come as a wider investigation into the overpayment on stamp duty, with multiple dwellings relief being just one of several misclassifications that can occur when purchasing land or property. In total, the firm has returned to their clients, £30,000,000 in reclaimed stamp duty fees from HMRC over the past three years. This comes as proprietary research from Cornerstone has unveiled that millions of homeowners (61%) have never considered the possibility of errors in the stamp duty they paid.
Cornerstone Tax 2020 said, “By conducting a thorough analysis, seeking professional advice, and understanding the applicable regulations, you can minimize the risk of overpaying SDLT.
“However, if an overpayment does occur, initiating a review promptly allows you to rectify the situation, gather evidence, and pursue appropriate actions to claim a refund or make adjustments as required.”