Stamp Duty Land Tax abolition of Multiple Dwellings Relief from 1 June 2024
Published 6 March 2024
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Who is likely to be affected
Purchasers of residential property in England and Northern Ireland who acquire more than one dwelling in a single transaction or linked transactions.
General description of the measure
This measure abolishes Multiple Dwellings Relief (MDR) from 1 June 2024. MDR is a bulk purchase relief in Stamp Duty Land Tax (SDLT). The rate of tax is normally determined by the total consideration given for land. MDR is available to any purchaser buying 2 or more dwellings in a single transaction, or linked transactions, and allows the purchaser to calculate the tax based on the average value of the dwellings purchased as opposed to their aggregate value.
Policy objective
MDR was introduced in 2011 to reduce a potential barrier to investment in residential property and promote private rented sector (PRS) housing supply. An external evaluation of MDR carried out as part of HMRC’s Tax Reliefs Evaluation Programme found no strong evidence that the relief plays a significant role in supporting residential property investment, and that it has a minimal positive impact on overall housing supply or PRS supply. The evaluation has shown that MDR is not cost effective in meeting its original objectives. This measure therefore abolishes MDR from 1 June 2024.
Background to the measure
On 30 November 2021 a stage 1 consultation was published called Stamp Duty Land Tax: mixed-property purchases and Multiple Dwellings Relief which set out options to improve fairness and tackle abuse of MDR. The consultation closed on 22 February 2022. A response to that consultation has been published.
HMRC publishes statistics estimating the cost of tax reliefs which show that in 2022 to 2023 MDR cost £700 million.
In February 2023 HMRC commissioned an external evaluation of MDR as part its Tax Reliefs Evaluation programme, the aim being to understand the extent to which MDR achieves its original policy aims. The outcome of the evaluation is published.
Detailed proposal
Operative date
This measure will apply to transactions with an effective date on or after 1 June 2024.
For contracts which exchanged on or before 6 March 2024, MDR will continue to apply, even where completion of the purchase takes place on or after 1 June 2024. This is subject to there being no variation of the contract after 6 March 2024.
MDR will also continue to apply to contracts which substantially perform before 1 June 2024.
For transactions which are linked and include the purchase of dwellings both before and after the change, those pre and post change transactions will be treated as unlinked for the purposes of MDR.
Current law
The SDLT legislation is in Part 4 to the Finance Act 2003.
Schedule 6B to the Finance Act 2003 sets out the rules for MDR.
Proposed revisions
Legislation will be introduced in Spring Finance Bill 2024 repealing Schedule 6B.
Summary of impacts
Exchequer impact (£million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| — | +70 | +220 | +300 | +340 | +385 |
These figures are set out in Table 5.1 of Spring Budget 2024 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Spring Budget 2024.
Economic impact
This measure is not expected to have any significant macroeconomic impact.
Impact on individuals, households and families
This change will not impact individuals purchasing a single dwelling. It will only increase the SDLT payable by individuals purchasing 2 or more dwellings in a single or linked transactions and may impact affordability for some households purchasing multiple dwellings. However, given the evaluation found that only 17% of private individuals claiming MDR said they were aware of MDR before purchase and that most individuals claiming MDR are for higher value purchases (with a median purchase value of £940,000), it is not expected that this change will impact family formation, stability or breakdown.
Customer experience is expected to remain broadly the same as this measure does not significantly alter how individuals interact with HMRC. However, the change will improve customer experience to the extent that it will simplify the SDLT rules and remove the scope for incorrect claims which would result in an HMRC enquiry to put it right.
Equalities impacts
The impacts of this measure will fall to those who are buying multiple residential properties in a single or linked transactions, which is expected to be in line with the existing distribution of the ownership of property. This measure is not expected to impact on this distribution for any protected group.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses.
Businesses such as landlords purchasing a single buy-to-let property will not be impacted by this measure. Only businesses purchasing multiple dwellings in a single or linked transactions will be impacted.
Those businesses purchasing 6 or more dwellings or mixed property (meaning purchases which consist of both residential and non-residential property) will continue to qualify for the non-residential rates of SDLT.
One-off costs will include familiarisation of the revised rules and could also include upskilling staff and updating software to reflect any changes to the SDLT payable.
There are not expected to be any continuing costs.
Customer experience is expected to remain broadly the same as this measure does not significantly alter how affected business interact with HMRC. However, this measure will improve customer experience to the extent that it simplifies the SDLT rules.
This measure is not expected to have an impact on civil society organisations.
Operational impact (£million) (HMRC or other)
HMRC will need to make changes to IT systems to support this change at an estimated cost of £380,000. HMRC may incur some initial staff costs for this measure which are being quantified.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from land transaction returns and regular engagement with stakeholders.
Further advice
If you have any questions about this change, contact the HMRC Stamp Taxes team at stamptaxes.budgetfinancebill@hmrc.gov.uk.