Abolition of Multiple Dwellings Relief does not prevent reclaims being made

The issue

On 6 March 2024 the Chancellor announced that Multiple Dwellings Relief (MDR) was to be abolished from 1 June 2024 (unless contracts were exchanged prior to 6 March 2024). For most transactions, this means that MDR can no longer apply to a transaction.

This valuable relief has now ceased to exist. However, that does not mean that we should forget about it just yet. Many property transactions will have completed within the last year, where MDR could have been validly claimed but was not. As a result, it is likely that many will have overpaid their SDLT.

As at today, SDLT reclaims can still be made for transactions entered into from 22 May 2023.

However, the 1 June 2024 abolition date refers to the date of transactions rather than the date from which the relief can be claimed. Therefore, valid MDR reclaims can still be made after 1 June.
 
MDR reclaims
 
Purchasers can amend their SDLT returns to claim MDR and obtain an SDLT refund by giving notice to the Stamp Office. Such a notification will be valid if it is made within a year and 14 days of the effective date of the transaction (which is usually completion).

When making SDLT reclaims, it is advisable to provide full details of the basis for any claim by reference to legislation and case law. This is because the making of a full disclosure limits the time that HMRC can effectively enquire into the SDLT position to nine months. Also, anecdotally, it seems that HMRC are less likely to enquire into a case when they have a thorough report and explanation of the basis behind a claim.
 
The main message is that purchasers, estate agents and conveyancers should still be alive to the possibility of making an SDLT reclaim in respect of property transactions that have occurred in the last year, which might be eligible for a MDR claim.
 

Our view
 
The message about claiming MDR in respect of annexes has never been widely received (although far more professional advisers have been aware of it recently compared to 2011) and we still see many transactions whereby MDR could and should have been claimed (but for some reason was not). In recent years HMRC has criticised certain SDLT reclaims operators for aggressively pursuing invalid MDR reclaims, but this has perhaps had the effect of putting some buyers and advisors off from making claims that do have merit.

Recent buyers of houses with annexes (and indeed any buyers of multiple dwellings) should be considering if reclaims are available for transactions in the last year and 14 days (although they will need to be quick for the earlier ones as the window is closing fast!). It may be that they can secure a significant SDLT reclaim before this relief really does become a piece of tax history.