Although solicitors are not financial advisors and as such are not either regulated or permitted to provide our clients with financial advice we are involved in the calculation and payment of the Stamp Duty Land Tax (SOLT) payable on the purchase of property to HMRC. 

Whilst SOLT is not payable upon the lower price bracket of transactions and first time buyer criteria is slightly different the majority of transactions do incur the liability to pay SOLT to HMRC. SOLT is calculated upon the purchase price of the property. Some transactions may relate to more than one property but are inter dependent. 

For example, multi-generational living is an increasingly common option for families who may have elderly relatives and are looking to accommodate them within the family home by way of a "granny annex" or similar. Quite often two houses are sold and replaced by one property large enough to accommodate the family unit and also dependent or elderly parents. 

Buying a home with separate annex accommodation often represents a significant and costly move and of course incurs the SOLT liability. However if the property truly does have a separate and stand alone living annex then there is an option to claim Multiple Dwelling Relief (MOR). This relief is widely used for development purchases of more than one property but Joe Bloggs may not be aware the relief is available to private buyers in the right circumstances. 

Furthermore many residential conveyancers may not be aware such MOR is available and as such could be potentially negligent if they fail to advise their clients in such circumstances whereby MOR can be applied. 

A qualifying annex can be attached to the main house or even part of it, but must have a separate entrance and lockable door between the two properties and include its own kitchen and bathroom/shower facilities as well as the living/bedroom space. 

To illustrate the potential savings if we look at an example of a purchase of a house which includes a separate qualifying annex and say the price is £1.4 million. Assuming the higher rate SOLT does not apply the SOLT on the full purchase price is £81,250.00. 

Whereas if the SOLT Multiple Dwelling Relief is applied the SOLT is 

£45,000.00 resulting in a saving of £36,250.00 which will go a long way to cover all other moving costs and any planned improvements. 

The way the relief works is the price is divided by 2 and the SOLT calculated on the half value and then multiplied by 2. So £1.4 million divided by 2 equals £700k. The SOLT on £700k is £22,500.00, times 2 equals £45,000.00 which results in the £36,250.00 saving. 

The MOR is claimed when the Buyers conveyancer submits the SDLR return to HMRC via the online portal just after legal completion of the purchase and as such no separate tax return is required. The return must be lodged with HMRC within 14 days of the completion date of the purchase. There is also a period of 12 months from the date of completion to amend any HMRC SOLT return. This is useful if the incorrect return was made and MOR not initially claimed. 

However the window for MOR may soon be closing as the Government are holding a consultation on these reliefs and will be reporting on the findings. Such consultations are usually a herald for the tightening of the rules and clearly the inference is the MOR will be either removed, amended or reduced. 

Whilst I repeat conveyancers are not qualified to provide financial or tax advice most firms do have connections with local accountants or tax advisors experienced in the field of Stamp Duty Land Tax who can also consider if any claim for overpaid SOLT can be made. 

John Robson 

Residential Property Manager Milners Solicitors 

Harrogate Office.