SDLT on subsidiary dwellings – have you paid too much?

Have you recently bought a residential property with a subsidiary dwelling, such as an annex or granny flat?

If so, you are likely to have overpaid Stamp Duty Land Tax (SDLT) due to a little known SDLT relief for such properties. The good news is that you have 12 months from the SDLT1 filing date (the filing date is 30 days after the completion date) to apply to HMRC for a refund. For example, for a purchase completing on 1 December 2016, you have until 31 December 2017 to claim your SDLT refund.

You could receive an SDLT refund of £10,000 for properties worth between £500,000 and £925,000.

What is classified as a subsidiary dwelling?

For the purposes of this relief, a “dwelling” means a building or part of a building which is suitable for use as a single dwelling or is in the process of being constructed or adapted for such use. To be suitable for use as a single dwelling for these purposes there must normally be separate access to the subsidiary dwelling.

Does it count as an additional property for SDLT purposes?

Currently, there is a 3% SDLT surcharge for each additional residential property you purchase. However, this would be unlikely to apply if the subsidiary dwelling(s) and the main dwelling were purchased at the same time. This is due to a separate SDLT relief from the surcharge which is available for such dwellings, introduced in the Finance Act 2016.

It has been widely reported recently that a high proportion of property buyers overpay SDLT due these types of reliefs being overlooked.

However, we are specialists in this area and are happy to perform an obligation-free check to see if you are entitled to a SDLT refund on your property purchase.

A version of this blog originally appeared on the website of one our MHA association member firms, MHA MacIntyre Hudson