Appeals tribunal makes first ruling on Stamp Duty Land Tax multiple dwellings relief

The first-tier tribunal has recently ruled on whether a transaction would qualify for multiple dwellings relief for Stamp Duty Land Tax ("SDLT") purposes.

Multiple Dwellings Relief allows SDLT on the purchase of two or more dwellings to be calculated by reference to the average value of the properties multiplied by the number of dwellings rather than the total purchase price. It can lead to a reduction in the amount of SDLT payable on a purchase and is therefore a valuable relief for purchasers. It is often considered in the context of "granny annexes" where there is a separate part of the property which may be suitable for use as a standalone dwelling.

The case of Fiander and Brower v HMRC concerned a property consisting of a house and an annexe which was joined by a corridor. The tribunal focused their decision of the definition of a dwelling and decided that the multiple dwellings relief was not available and the purchaser was therefore required to pay an additional £10,000 of SDLT. The tribunal found that the property should be treated as a single dwelling and their judgment focused on whether the main house and annex were, at completion, each suitable for use as a single dwelling.

In making their judgment, they considered:

• the existence of a corridor joining the main house and the annex indicated that both parts were too closely physically connected for either to be suitable as a single dwelling;

• there was a lack of privacy and security as a result of the two properties being so close;

• that the test as to whether each of the house and annex were suitable for use as a single dwelling is an objective one based on the physical features of the property at completion and it cannot be performed on the assumption that new physical features will be introduced in the future. For instance, the argument that an adjoining door could be installed as a "physical" barrier between the two parts of the property was not thought to be relevant to the "suitability" test.

The judgment serves as a useful reminder of HMRC's approach towards granny annexes and the availability of multiple dwellings relief. 

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