Stamp Duty Land Tax: Possible changes for residential property

The closing date for comments on HMRC’s consultation document on mixed property purchases and multiple dwellings relief (MDR) is fast approaching. Those interested have until 22 February 2022 to submit their comments and after that, HMRC will then carry out a formal consultation on any changes it proposes to make to the Stamp Duty Land Tax (SDLT) legislation.

In 2020-21 SDLT raised over £8.6 billion and so it is an important source of government revenue. The Treasury has become concerned that some people buying residential property are avoiding SDLT by either abusing the rules relating to MDR or incorrectly classifying their purchases as mixed residential/non-residential, when there is little to support this.

For those buying residential property in England and Wales, the introduction of various surcharges over the last five years has meant that SDLT can be a big cost. Consequently, many taxpayers have sought to reduce their liability by aggressive and so say HMRC, ‘unreasonable interpretations’ of their guidance and the SDLT legislation.

The consultation proposes various options to tackle HMRC’s concerns including an apportionment basis for mixed property purchases whereby, the purchase price for the relevant property is apportioned between the residential and the non-residential elements and SDLT is then paid at the applicable rate to each. This will inevitably result in increased SDLT bills and therefore, for those currently in the process of buying residential property, it might be advisable to accelerate these purchases.