Annex not considered a separate dwelling for MDR

Stamp Duty Land Tax (“SDLT”) and Multiple Dwellings Relief (“MDR”)

SDLT is the tax due when property or land is bought over a certain value in England and Northern Ireland.

The rate of SDLT charged varies in certain circumstances and depends on the consideration paid and whether the land or property is residential, non-residential or mixed use.

In some circumstances, a transaction may be eligible for certain “reliefs” which can significantly reduce the amount of SDLT due. One such relief is MDR, which is available when more than one dwelling is bought in one transaction, or where a number of linked transactions include more than one dwelling.

When applicable, MDR effectively divides the total sum paid by the number of dwellings and calculates the SDLT payable on each individual dwelling. As a result, lower rates of SDLT typically apply to each dwelling and the combined SDLT is reduced significantly.

The importance of a single dwelling

In the Finance Act 2003 a building or part of one counts as a dwelling if it is used (or is suitable for use) as a single dwelling, or it is in the process of being constructed or adapted for such use. Land that is to be occupied or enjoyed with a dwelling as a garden or grounds is part of that dwelling. However, a dwelling is not further defined and is open to interpretation.

HMRC has published guidance to provide clarity over what it considers to be a dwelling when determining the availability of MDR. A range of factors are taken into consideration, such as whether a property is sufficiently self-contained or independent, the facilities which are available and the level of privacy afforded to the property.

The recent case of Mullane and another v HMRC (Judge Gething) highlights the importance of the facilities which are provided allowing use as a separate dwelling. In this case, the property purchased comprised a main house with an annex connected by a glass conservatory. The cooking facilities in the annex constituted a microwave in the living area and a small cooker in front of the sink. The First-tier Tribunal held that MDR was not available as the annex had insufficient cooking facilities capable of satisfying building and fire safety regulations. The facilities were considered unsafe, with no alternatives being provided. MDR would have been available had the annex been capable of satisfying building regulations.


Whilst a number of factors will be considered when determining whether MDR is available, it is clear that the provision of safe and independent cooking facilities is of great importance. Therefore, before completing any relief application as part of a SDLT return, a buyer must take specialist advice to determine whether such relief is likely to be achieved.

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