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taxadvisor.uk, Chartered Certified Accountant
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I am purchasing a property with an annex and was wondering

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Good day, I am purchasing a property with an annex and was wondering about multi dwelling tax relief, what is the requirements to qualify?
JA: Have you talked to a tax professional about this?
Customer: No my conveyancer just mentioned that i may want to look into it, not sure where to start
JA: Anything else you want the Accountant to know before I connect you?
Customer: no

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Customer: replied 2 days ago.
ok do you need any additional information
Customer: replied 2 days ago.
no thanks

Thank you for your question.

It depends on how independent the annexe is... there has been some clarity from HMRC on this subject and I am attaching a couple of articles on it here

https://www.bdo.co.uk/en-gb/insights/tax/tax-support-for-professionals/granny-flats-remember-to-claim-sdlt-multiple-dwellings-relief

and here

https://www.fjg.co.uk/blog/2019/08/06/buying-a-property-with-a-granny-annexe-or-self-contained-additional-dwelling

and HMRC internal manual SDLTM09755

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09755

My aim is to give you a professional service. I hope this is helpful and answers your question.

Please remember to rate my service by selecting the 5 stars at the top of the screen before you leave JA today. If you need more assistance, please use the reply box below and let me know. It has been my pleasure to assist you with your question.

Customer: replied 2 days ago.
Good day I have read the links in your response, am I correct in my interpretation in that as I sold my main residence before this purchase of a new residence I am not subject to Higher Rate tax on the sale? The property that we are purchasing is valued at over £40,000 and is not subject to a lease, we do not have an interest in any other properties and this property that we are purchasing will be our main residence. There fore we meet criteria a & b but not c & d of the test for higher rate tax. What would the difference be in claiming MDR or Single dwelling on a property value £475,000 where the main property is a two/third of the price and the annex 1/3? The Annex is self contained dwelling but will be used by family member.

Thank you for your reply.

[Q] am I correct in my interpretation in that as I sold my main residence before this purchase of a new residence I am not subject to Higher Rate tax on the sale?

[A] Correct

SDLT calculation

Single dwelling property value £475,000

SDLT (125,000 x 2%)+(225,000 x 5%) £11,250

Claiming MDR

average price of each dwelling (475,000/2) £237,500

SDLT 2 x (112,500 x 2%) £4,500

The minimum rate of tax under the relief is 1% of the amount paid for the dwellings. In your case £4,750

SDLT relief for multiple dwellings is covered here

https://www.gov.uk/guidance/stamp-duty-land-tax-relief-for-land-or-property-transactions#sdlt-relief-for-multiple-dwellings

Look at example 4 here (Purchase of house with granny flat without surcharge)

https://www.blakemorgan.co.uk/additional-3-stamp-duty-land-tax-surcharge-on-granny-flats-and-other-dwellings/

I hope this is helpful and answers your question.

taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 2 days ago.
Thanks, it looks like it would be beneficial to apply for the multi dwellings discount, how much would it cost to enlist you or a colleague to deal with this tax application on our behalf as the conveyancer can only take instruction from a
specialist

I thank you for accepting my answer.

Send me an email at [email protected] and we can discuss this matter.

Best wishes.