Multiple dwellings relief and HMRC enquiries

Multiple dwellings relief, usually shortened to MDR, was a relief from Stamp Duty Land Tax (SDLT) for people buying more than one dwelling in a single transaction or a series of linked transactions. SDLT is charged in England and Northern Ireland. The relief has been abolished for purchases with an effective date on or after 1 June 2024, subject to transitional rules.

Abolition did not close the book on past claims, some of which were made after completion by amending the return to ask for a refund. This guide explains how the relief worked, what counted as a dwelling, how HMRC checks past claims, and what to do if HMRC has written about one.

What was multiple dwellings relief?

MDR was introduced by section 58D of, and Schedule 6B to, the Finance Act 2003, for transactions with an effective date from 19 July 2011. The effective date is usually completion, or earlier if the contract was substantially performed first.

It applied where a purchase was mainly of an interest in at least two dwellings, with or without other property, or where the purchase of one dwelling was linked to the purchase of another. Instead of charging tax on the total price at the rates for that total, the relief taxed the dwellings by reference to the average price per dwelling. Because SDLT rates rise in bands, that usually produced less tax.

The relief was never automatic. Section 58D(2) required it to be claimed in a land transaction return or an amendment of one, and HMRC’s manual confirms it did not apply unless claimed. That rule matters for late claims, covered below.

How was multiple dwellings relief calculated?

Paragraph 5 of Schedule 6B sets out the method. For a purchase not linked to any other:

1. Divide the price attributable to the dwellings by the number of dwellings.
2. Work out the SDLT on that average, as if it were a purchase of residential property.
3. Multiply the result by the number of dwellings.
4. If the answer is less than 1% of the price attributable to the dwellings, the tax on the dwellings is 1% of that price instead. This was the relief’s minimum.

Linked transactions had a further step sharing the tax between them. Where a purchase also included property that was not a dwelling, such as a shop, the price was split on a just and reasonable basis, and the non-dwelling part bore its proportionate share of the tax that would have been due without the relief.

If the purchase was liable to the higher rates for additional dwellings, the relief still applied, but the tax on the average was worked out at the higher rates (Schedule 6B, paragraph 5(6A)). HMRC’s manual takes the same approach to the surcharge for non-UK resident buyers.

A worked example

If you are checking an old claim, the arithmetic can be done by hand. These figures are invented. They use the standard residential rates in force when MDR ended, which applied to effective dates from 23 September 2022 to 31 March 2025: 0% on the first £250,000, 5% on the part up to £925,000, 10% on the part up to £1.5 million, and 12% above that. They assume the higher rates did not apply.

Suppose a house with a self-contained annexe was bought for £800,000, and both the house and the annexe qualified as dwellings.

At a price of £500,000, the average of £250,000 would carry no tax at all, so the 1% minimum would apply: £5,000 with the relief, against £12,500 without it. Either way, the saving depends on there really being two dwellings.

What counted as a dwelling?

Under paragraph 7 of Schedule 6B, a building or part of a building counted as a dwelling if it was used or suitable for use as a single dwelling, or was being constructed or adapted for that use. Its garden or grounds, including buildings on them, counted as part of it. Some purchases of dwellings not yet built counted too.

Two flats in a block are plainly two dwellings. The difficult cases are houses with an annexe or “granny flat”, or a self-contained area inside a larger home.

Did an annexe count as a separate dwelling?

Only if, at the effective date, it was suitable for use as a single dwelling in its own right. The Upper Tribunal set out the approach in Fiander and Brower v HMRC [2021] UKUT 0156 (TCC):

• “Suitable” means fit for use as a single dwelling, judged on the property’s physical attributes at the effective date. It is not enough that it could be made suitable by adaptation, although a property needing some repair can still qualify, as a question of degree.
• “Dwelling” means a place that provides for basic living needs, including sleeping and personal hygiene.
• “Single” means a separate, self-contained unit, with a degree of privacy, self-sufficiency and security.
• The test is objective, judged for occupants generally rather than, say, a relative, and the buyer’s intentions are not relevant. It weighs all the facts, including physical layout and access.

In Doe v HMRC [2022] UKUT 00002 (TCC) the Upper Tribunal applied the same principles to a main house and annexe.

HMRC’s manual (SDLTM00410 to SDLTM00430) lists the factors it considers: separate sleeping, living, bathroom and kitchen facilities; independent access, not through the other part; privacy, including whether a connecting door can be locked; control of its own electricity, water and heating; and legal limits such as planning conditions or covenants. Council tax, estate agents’ particulars and separate post or bills are, in HMRC’s view, indicators but not decisive. HMRC says it applies an “objective observer” test in any compliance check. The tribunal in Fiander noted that HMRC’s manuals record HMRC’s views and do not decide what the law means.

Changes within three years

If, within three years of the effective date, an event happened that would have meant more tax had it happened before the purchase, the buyer had to make a further return and pay the extra tax within 30 days of the event (paragraph 6). The period ended sooner if the buyer sold the dwellings to an unconnected person. An “event” includes a change of plan; HMRC’s example is combining smaller dwellings into larger ones.

Six or more dwellings: the non-residential rates

Separately from MDR, section 116(7) of the Finance Act 2003 treats six or more separate dwellings bought in a single transaction as not residential property, so the non-residential rates apply. Before abolition, the buyer could choose MDR or this rule, whichever gave less tax. HMRC’s manual says that choice has gone: section 116(7) now simply applies.

When was multiple dwellings relief abolished?

Section 7 of the Finance (No. 2) Act 2024 repealed section 58D and Schedule 6B for land transactions with an effective date on or after 1 June 2024. The change was announced on 6 March 2024, and the Act received Royal Assent on 24 May 2024.

The relief still applies, whatever the effective date, to a transaction under a contract:

• entered into and substantially performed before 1 June 2024; or
• entered into on or before 6 March 2024, unless after that date the contract was varied or rights under it assigned, the transaction followed the exercise of an option or right of pre-emption, or an assignment or sub-sale gave someone other than the buyer the right to call for the transfer.

Where linked transactions fell either side of the change, a claim could be made only for the earlier ones, which were then treated as no longer linked to the later ones. HMRC’s manual says a buyer relying on the 6 March 2024 rule must give the exchange date on the return, or the claim will be rejected.

How HMRC checks multiple dwellings relief claims

The rules are in Schedule 10 to the Finance Act 2003. They resemble the income tax rules, but the dates run from the SDLT return and the transaction, not from a tax year.

An enquiry into the return or an amendment

An SDLT return is due within 14 days after the effective date (30 days for transactions before 1 March 2019); that deadline is the filing date. The buyer can amend the return within 12 months after the filing date, and an amendment producing a repayment must come with the contract and the transfer document. Because MDR could be claimed only in a return or an amendment, a claim made after filing had to take this form.

HMRC can open an enquiry within nine months after the filing date (or after delivery, if the return was late) or, for an amended return, within nine months after the amendment. If the original window has closed, an enquiry prompted by an amendment is limited to what the amendment covers. It ends with a closure notice, stating HMRC’s conclusions and making any amendments.

A refund does not mean HMRC has accepted the claim. HMRC’s refund guidance says it pays without checking eligibility, that a repayment does not mean it agrees the refund is due, and that it has up to nine months to check an amended return or claim.

After the window: discovery and repayment assessments

HMRC can still act by assessment later. A discovery assessment can be made where tax that ought to have been assessed has not been, or relief given is excessive (paragraph 28). Tax repaid that ought not to have been can be assessed as if it were unpaid tax, with any interest paid on the repayment (paragraph 29).

Where a return was delivered, either assessment needs one of two conditions (paragraph 30):

• the situation is attributable to fraudulent or negligent conduct by the buyer, a person acting on the buyer’s behalf, or a partner; or
• when the enquiry window closed, or an enquiry was completed, HMRC could not reasonably have been expected to be aware of it from the information made available to it.

No assessment can be made where the problem is a mistake about the basis of calculation and the return followed the practice generally prevailing at the time. The time limits run from the effective date (paragraph 31):

Two details matter where an agent made the claim. Carelessness by a person acting on the buyer’s behalf counts as well as the buyer’s own. And an assessment to recover a repayment is in time if made within one year after the repayment, even if the general limit has passed.

Our pages on discovery assessments and how far back HMRC can investigate explain the income tax equivalents.

Late claims and overpayment relief

Paragraph 34 of Schedule 10 lets a person claim repayment of SDLT they believe was not due, within four years after the effective date. HMRC is not liable to give effect to such a claim in listed cases, including “Case A”: tax that was excessive because of a mistake consisting of failing to make a claim.

In L-L-O Contracting Ltd and others v HMRC [2025] UKUT 00127 (TCC) the Upper Tribunal held that buyers who had not claimed MDR in a return or amendment had made that kind of mistake, so their overpayment relief claims were excluded. HMRC can enquire into an overpayment relief claim within nine months after it was made (Schedule 11A, paragraph 7).

Information notices

Schedule 36 to the Finance Act 2008 applies to SDLT. After a return is delivered, a taxpayer notice about that transaction needs a condition to be met, mainly an open enquiry into the return or a related claim, or an officer’s reason to suspect that relief is excessive. See our guide to HMRC information notices.

Stamp Duty refunds and repayment agents

HMRC has published warnings about SDLT refund claims made through repayment agents, including MDR claims. Its press release of 30 May 2022 described agents approaching new homeowners and offering refunds on a “no win, no fee” basis. It said HMRC raises enquiries into such claims, sometimes after the agent has been paid, leaving the homeowner to repay the difference with interest and possibly a penalty. One example was a claim that a bedroom with an en-suite was a separate dwelling. HMRC has also said that where a refund is due, the buyer can claim it directly at no cost.

Whoever prepared the claim, the tax is the buyer’s:

• The buyer is liable. Section 85(1) of the Finance Act 2003 makes the purchaser liable to pay the tax. HMRC pays refunds to the buyers unless they sign a letter telling it to pay someone else.
• The buyer is responsible for the claim. HMRC’s refund guidance says that if you pay an agent to claim for you, you are still responsible for checking the claim is correct, and must repay anything not due with interest, plus any penalty.
• Time limits can stretch. An agent’s carelessness can give HMRC six years to assess.

Penalties where an agent made the error

The penalty for an inaccurate document is in Schedule 24 to the Finance Act 2007. Its list of documents includes the SDLT return, and any document HMRC is likely to rely on, without further enquiry, to decide a person’s liability or a repayment. HMRC’s guidance applies it to SDLT documents due to be filed on or after 1 April 2010, a date before MDR was introduced.

Under paragraph 18, if a document given to HMRC on your behalf contains a careless inaccuracy, you are liable to the penalty, even if the agent made the mistake. But you are not liable for anything done or omitted by your agent if you satisfy HMRC that you took reasonable care to avoid the inaccuracy. HMRC’s guidance sets the benchmark as going to an apparently competent adviser, giving them a full and accurate set of facts, checking their work as far as you are able, and adopting it. It says that leaving everything to an agent is not reasonable care, and that carelessness in choosing an agent can count against you.

Where an agent acted dishonestly, HMRC’s guidance says the buyer’s own behaviour is still judged on the facts. A separate penalty can be charged on anyone who deliberately gives a taxpayer false information, intending their document to be wrong (paragraph 1A). Recovering money from an agent is a contractual question for a solicitor; we deal with the tax side.

Penalties and interest if HMRC overturns a claim

If HMRC concludes that MDR was not due, the tax relieved becomes payable, and:

• Interest is charged at HMRC’s main late payment rate, which has been the Bank of England base rate plus 4% since 6 April 2025. If HMRC paid interest on the refund, it can recover that too.
• A penalty can be charged if the inaccuracy was careless or deliberate, as a percentage of the extra tax. An error that was innocent at the time is treated as careless if the person later discovers it and does not take reasonable steps to tell HMRC.

Our guide to penalties for careless and deliberate errors explains the ranges, and the HMRC penalty calculator applies them to your answers. If the total cannot be paid at once, see Time to Pay arrangements.

Scotland and Wales

SDLT does not apply in Scotland or Wales. Scotland has Land and Buildings Transaction Tax, administered by Revenue Scotland. Wales has Land Transaction Tax, administered by the Welsh Revenue Authority, for purchases completed on or after 1 April 2018. Each has its own rules, which this guide does not cover.

If HMRC has written about a multiple dwellings relief claim

1. Identify the letter. An enquiry notice, an information notice, a closure notice, an assessment and a penalty each work differently. See identifying your HMRC letter.
2. Diary the deadlines. An appeal against a closure notice or assessment must be in writing to the officer, with grounds, within 30 days after the date of issue. An appeal does not stop the tax being payable: postponing it needs a separate written application to HMRC within the same 30 days. If an information deadline cannot be met, ask for more time before it passes.
3. Gather the documents: the contract, transfer deed, SDLT return, plans, sale particulars, and evidence of the layout and services at completion.
4. Check how the claim was made: in the original return (relief code 33 on HMRC’s SDLT1 form) or later, by amendment or letter. The dates decide which of HMRC’s powers can apply.
5. Check who the agent was and what they sent: everything submitted in your name, the authority you signed, who received the refund, and the terms you agreed.
6. Test the claim against the law, not the agent’s description of it.
7. If the claim turns out to have been wrong, how fully and how early that is disclosed affects any penalty; see voluntary disclosures.

Our page on compliance checks explains how HMRC enquiries usually run, and our guide to appealing an HMRC decision covers reviews and the tribunal. If HMRC has written about an MDR claim, contact us with a photo of page one.

Frequently asked questions

Can I still claim multiple dwellings relief?

Only for a transaction it still applies to (broadly, an effective date before 1 June 2024, or one within the transitional rules), and only in the return or an amendment made within 12 months after the filing date. For most purchases that window has closed. The Upper Tribunal has held that overpayment relief cannot be used instead where the relief was simply not claimed.

Can HMRC take back a Stamp Duty refund for multiple dwellings relief?

Yes, if the relief was not due. HMRC can enquire into an amended return within nine months after the amendment, and after that can assess if the conditions and time limits above are met. The tax is repayable with interest, and a penalty may be charged.

Is the repayment agent liable if the claim was wrong?

Not for the tax, which is the buyer’s. Whether the buyer also faces a penalty depends on whether they took reasonable care, including in choosing and checking the agent. Any claim against the agent is a separate, contractual matter.

Did a granny annexe count as a separate dwelling?

Only if, at the effective date, it was suitable for use as a single dwelling in its own right, judged objectively. HMRC’s guidance says an annexe reached through the living space of the main house, or whose occupants cannot control their own utilities, is likely not to be a separate dwelling.

Does multiple dwellings relief apply in Scotland or Wales?

SDLT and its reliefs apply in England and Northern Ireland. Scotland and Wales have their own taxes with their own rules.

Sources

• Finance Act 2003: section 58D and Schedule 6B; sections 76, 85 and 116; Schedule 10, paragraphs 6, 12, 13, 23, 28 to 31A, 34 to 34B, 35, 36, 38 and 39; Schedule 11A, paragraphs 1 and 7
• Finance Act 2011, Schedule 22, paragraph 9 (as enacted); Finance Act 2019, section 46
• Stamp Duty Land Tax (Temporary Relief) Act 2023, section 1
• Finance (No. 2) Act 2024, section 7
• Finance Act 2007, Schedule 24, paragraphs 1, 1A, 3 and 18
• Finance Act 2008, Schedule 36, paragraphs 21A and 63
• Fiander and Brower v HMRC [2021] UKUT 0156 (TCC); Doe v HMRC [2022] UKUT 00002 (TCC); L-L-O Contracting Ltd and others v HMRC [2025] UKUT 00127 (TCC)
• HMRC, “Stamp Duty Land Tax: abolition of Multiple Dwellings Relief from 1 June 2024”, policy paper, 6 March 2024 (GOV.UK)
• HMRC Stamp Duty Land Tax Manual: SDLTM00365, SDLTM00410, SDLTM00415, SDLTM00425, SDLTM00430, SDLTM29901, SDLTM29902, SDLTM29905, SDLTM29945, SDLTM29955 and SDLTM29965
• HMRC Compliance Handbook: CH81013, CH84520 and CH84540
• HMRC, “Apply for a refund of Stamp Duty Land Tax” (GOV.UK, 26 June 2026); “How to complete your Stamp Duty Land Tax SDLT1 paper return” (updated 20 February 2026); “HMRC interest rates for late and early payments” (updated 23 December 2025)
• HMRC press releases on SDLT refund claims, 30 May 2022 and 31 July 2025 (GOV.UK)
• GOV.UK, “Stamp Duty Land Tax”; Welsh Revenue Authority, “Land Transaction Tax guide”; Revenue Scotland, “Land and Buildings Transaction Tax”

This guide is general information, not advice on any particular case.