HMRC’s published guidance on the application of the 3% higher rate of Stamp Duty and Land Tax (SDLT) has been updated for mixed use properties.
A ‘mixed’ property is one that has both residential and non-residential elements, for example a flat connected to a shop, doctor’s surgery or office.
The higher rates of SDLT were introduced on 1 April 2016 and apply to purchases of additional residential property such as buy to let and second homes.
https://www.gov.uk/stamp-duty-land-tax/nonresidential-and-mixed-rates
At the time the new higher rates were introduced, HMRC confirmed that where there was a purchase of mixed use buildings consisting of residential and non-residential properties that the 3% higher rate of SDLT applied to the dwelling element.
HMRC’s guidance on this issue was updated on 13 November 2020. The new guidance makes it clear that HMRC’s view has changed and that the 3% surcharge will not apply to the dwelling element. The guidance adds the caveat that the non-residential element of the transaction is neither negligible nor artificially contrived.
This change could allow affected purchasers to claim back any overpaid SDLT on mixed use, multiple dwelling transactions from HMRC within the legal time limits. HMRC’s guidance also suggests that purchasers can now make a non-statutory clearance application in the event of uncertainty over a transaction.
If you need any further advice feel free to contact us.
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