SDLT changes for mixed-use buildings

If a transaction involves a mixed purchase (for example, a shop with flats above); the non-residential rates of stamp duty land tax (SDLT) will usually apply to the purchase price. If the mixed-use transaction comprises more than one dwelling, then a claim for multiple dwellings relief (MDR) could be more beneficial.

SDLT changes for mixed-use buildings

In their guidance, HMRC had previously confirmed that whenever a transaction involving the purchase of mixed-use buildings (a mixture of residential and non-residential properties) occurs and MDR is claimed, the ‘second home’ higher rate of 3% SDLT will be applicable to the dwelling element. As per the recent change in HMRC’s viewpoint, new guidance has been updated on 13 November 2020 and cleared that the previous 3% surcharge will not be applicable on the dwelling element where multiple dwelling relief (MDR) is claimed. The guidance also added the caveat that the non-residential element of the transaction is neither negligible nor artificially contrived.

In this article we cover:

SDLT change concerning mixed-use properties

HMRC has recently corrected their guidance at HMRC manual SDLTM09740, stating that the additional 3% SDLT surcharge would not apply to the purchase of mixed-use transaction (mix of dwellings and non-residential property) where multiple dwellings relief is claimed. Multiple dwellings relief could be claimed by a taxpayer when more than one dwelling is acquired in a single transaction or a mixed-used purchase consisting of more than one dwelling. HMRC has backed track on their long standing viewpoint for such transactions. This change could allow the affected purchasers to claim back their overpaid SDLT from HMRC on transactions related to mixed-use, which involved multiple dwellings. Not only this, but HMRC also suggested that purchasers now can also make an application for statutory clearance in case of uncertainty over a transaction.

Example- Suppose, a company acquired 5 dwellings, 2 offices and agricultural land for 1M split into 5 transactions –

2 flats for £300,000 and 2 offices of £150,000

Agricultural land for £100,000

One dwelling - £100,000

One dwelling - £110,000

Two dwellings - £240,000

If we apportion the price of the dwellings, offices, and the agricultural land, the cost of dwellings was £750,000. Hence, the remaining £250,000 was the cost of offices and agricultural land.

First method – Calculation of SDLT No MDR

For first £150,000 – No SDLT

For next £100,000 - 2% SDLT (£2000)

And Remaining £750,000 – 5% SDLT (£37,500), which comes to £39,500 (£37500 + £2000).

Second method – Calculation of SDLT in case the higher rates of SDLT apply when MDR is claimed (with 3% surcharge)

Total price - £100,000

Price of the dwellings - £750,000

Total remaining consideration - £250,000

  1. As we know that the average price of all the 6 dwellings in the linked transaction is £125,000. We will calculate the SDLT on £750,000 at 3%, which is £22,500.
  2. If we calculate the non-residential element, it will be worked out as £250,000/£10,00,000 * £39,500 = £9,875.
  3. Sum of both element = £32,375 (£22500 + £9875)

Calculation of SDLT in case no higher rates of SDLT apply on mixed use transaction –

Transaction 1 - For Dwellings

Step – 1 Average price (£750,000/6) = £125,000. As the average value is £125,000, SDLT on average value would be nil.

Step – 2 Multiply it by the number of dwellings, again we are getting nil value but para 5(2) tells us to work out 1% of the value, i.e. £8,400

Step – 3 We have to ignore this step as we are talking about linked transactions.

Step – 4 Multiply by fraction CD/Total dwellings consideration = 300,000/750,000 * £7,500, which gives us £3000 as tax on the dwellings (1% of the value of dwellings)

For the remaining consideration

As, we previously worked out tax on all the linked transaction without relief, which is £39,500

(Fractional remaining consideration/Total dwellings consideration + Total remaining consideration) is £150,000/£10,00,000 giving tax of £5,925. Add £3,000 + £5,925 = £8,925 for Transaction 1.

Transaction 2

Tax on all the linked transactions without relief = £39,500

(Fractional remaining consideration/Total dwellings consideration + Total remaining consideration) is

£100,000/£10,00,000 * £39,500 = £3,950.

Transaction 3

As this transaction is for dwelling only, we will use higher rates of SDLT and 3% surcharge applies – 3% of 750,000 = £22,500.

Considerations for the dwellings for the relevant transaction/TDC (Total dwellings consideration) is 100,000/750,000 * 22,500 = £3,000.

Transaction 4

As this transaction is for dwelling only, we will use higher rates of SDLT and 3% surcharge applies – 3% of 750,000 = £22,500.

Considerations for the dwellings for the relevant transaction/TDC (Total dwellings consideration) is 110,000/750,000 * £22,500 = £3,300.

Transaction 5

As this transaction is for dwelling only, we will use higher rates of SDLT and 3% surcharge applies – 3% of £750,000 = £22500.

Considerations for the dwellings for the relevant transaction/TDC (Total dwellings consideration) is £240,000/£750,000 * £22,500 = £7,200

Transaction 1 – SDLT on 2 flats (£3000) + SDLT on 2 offices (£5925) = £8,925

Transaction 2 – Agricultural Land - £3,950

Transaction 3 – One dwelling - £3,000

Transaction 4 – One dwelling - £3,300

Transaction 5 – Two dwelling - £7,200

(£8,925 + £3,950 + £3,000 + £3,300 + £7,200) = £26,375

Refund claim

Taxpayers who have made a mixed-use purchase and claimed multiple dwellings relief; and have already paid the SDLT by applying the higher rates applicable to second property purchases may be entitled to claim a refund.

Similarly, if a taxpayer did not make a claim for the MDR relief because the higher rates of SDLT would have increased the chargeable SDLT above the default non-residential rates, a refund could be claimed. Such a claim could only be possible if the same is made within a year (12 months) of the filing of the SDLT return.

Also See: Stamp Duty Reduction for First Time Buyer


It is quite complicated to work out SDLT concerning mixed property purchases such as Buildings with flats over commercial property. Thus, it is recommended that advice from a professional expert is sought. As we know, HMRC has eliminated 3% SDLT on the residential element, which influences the landlords to understand how much SDLT they can save on their mixed property purchases and whether any SDLT they can claim back for the previous years.

We at DNS Accountants recommends taxpayers to review the last 4 years mixed purchases and prioritise the most recent one to identify whether any SDLT has been overpaid. If yes, you might be entitled to claim a refund.

We have helped many landlords claim their SDLT refund and are experts in working out SDLT (with or without a claim).

In case you are having any query or want specialist advice on "Changes in SDLT for mixed-use buildings", kindly call us on 03330886686, or you can also e-mail us at

Also See: How can HMRC find out about my rental income?

Disclaimer - "This article was correct at the date of publication. It is intended for general purposes only and does not constitute legal or professional advice. Independent professional advice should be sought before proceeding with any transaction".

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About the author
Blog Author

Owais Bombaywala
Working closely with individuals and businesses to help grow their business requires a significant amount of experience and industry knowledge. Owais is BA (Hons) Accounting and Finance and Member of ACCA. Besides being a compliance champion, he specialises in Property tax planning. With over 7 years of experience in Accountancy and Tax world, our clients count on us to give them timely and up to date advise to help them make the right move. Owais works closely with some of the DNS’s most valued clients to give them the confidence they need to focus on their business. He is known for his calm nature and proactive approach. At DNS, we proud to be a modern and client centric firm. Our advise doesn’t just look at what’s best for your business moreover our aim is to help you achieve your personal goals. Away from work, he resolve family disputes and provide care and support to elderly people. He is a founding member of Human welfare organisation Hounslow.


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