Multiple Dwellings Relief Abolished: Can You Still Claim SDLT Savings on Annexes?

Multiple Dwellings Relief (MDR) was abolished for transactions with an effective date on or after 1 June 2024. However, the relief is still relevant in three important situations: transitional provisions for contracts exchanged before 6 March 2024, retrospective claims on past transactions, and ongoing HMRC enquiries on previously claimed MDR.

This guide explains what's changed, who can still benefit, how historical claims work, and what alternatives remain for buyers of properties with annexes or multiple dwellings.

The Abolition of MDR from 1 June 2024

In the Spring Budget on 6 March 2024, the government announced the abolition of Multiple Dwellings Relief for transactions with an effective date on or after 1 June 2024. This means that if you completed a property purchase on or after 1 June 2024, MDR is no longer available — regardless of whether the property has a self-contained annexe, granny flat, or multiple units.

The abolition was confirmed despite industry opposition, as HMRC data showed MDR was being used in ways that went beyond the original policy intent. The government estimated that around 85% of MDR claims were for main residences with annexes rather than genuine investment in multiple dwellings.

Transitional Provisions

MDR is still available for certain transactions even after 1 June 2024, provided they fall within the transitional provisions:

• Contracts exchanged before 6 March 2024: If a binding contract was entered into before 6 March 2024, MDR can still be claimed even if completion took place on or after 1 June 2024.
• Substantial performance before 1 June 2024: If the contract was substantially performed (e.g., substantial payment was made) before 1 June 2024, MDR may still apply.
• Variations after 6 March 2024: If the contract was varied after 6 March 2024 in a way that results in substantially the same acquisition, the original exchange date is still used for transitional purposes.

If your transaction might qualify under the transitional provisions, specialist SDLT advice is strongly recommended — the rules are complex and HMRC scrutinises these claims closely.

Retrospective Claims on Past Transactions

If you purchased a property before 1 June 2024 and didn't claim MDR at the time, you may still be able to make a retrospective claim:

1. Amend the SDLT Return

The SDLT return can be amended within 12 months of the filing date. This is the simplest and fastest way to claim MDR retrospectively. Your conveyancer or a specialist SDLT adviser can file the amendment.

2. Overpayment Relief

If more than 12 months have passed since the filing date, you can make a claim for overpayment relief. This must be made within four years of the filing date for individuals (or six years for companies).

The overpayment relief claim involves:

• Submitting a written claim to HMRC Stamp Office
• Providing evidence that the SDLT was overpaid (i.e., that MDR should have applied)
• Including details of the property, the transaction, and the number of dwellings
• HMRC reviewing the claim and either accepting, partially accepting, or rejecting it

Claims can be complex, and HMRC may challenge the definition of what constitutes a separate dwelling. Specialist advice significantly improves the chances of a successful claim.

How MDR Was Calculated (Historical Reference)

For understanding historical claims, here's how MDR worked before abolition:

Under MDR, instead of calculating SDLT on the total purchase price, the SDLT was calculated based on the average price per dwelling. This typically resulted in a lower SDLT bill because the average price per dwelling fell into a lower SDLT band.

The Calculation

1. Divide the total purchase price by the number of dwellings
2. Calculate the SDLT on the average price per dwelling
3. Multiply the result by the number of dwellings

Example Without MDR

A property with a main house and a self-contained annexe purchased for £1.2 million:

• SDLT (residential rates): £63,750

Example With MDR

The same property, treated as 2 dwellings:

1. Average price per dwelling: £600,000 (£1.2m ÷ 2)
2. SDLT on £600,000 (residential): £20,000
3. Total SDLT: £40,000 (£20,000 × 2)
4. Saving: £23,750

What Counts as a Dwelling?

The definition of a dwelling remains relevant for retrospective claims. A dwelling is a self-contained living space with its own facilities. To qualify as a separate dwelling, the space must have:

• A living area (e.g., a living room or kitchen/diner)
• Sleeping accommodation (e.g., a bedroom)
• Bathroom facilities (e.g., a bathroom or shower room)
• Some degree of independence from the main house

Common Examples of Separate Dwellings

• A self-contained annexe with its own kitchen, bathroom, and living area
• A granny flat that could be let independently
• A detached outbuilding converted to living accommodation
• A separate flat above a garage or outbuilding
• A property divided into separate flats

What Doesn't Qualify

• A bedroom with an en-suite bathroom (no independent living area or kitchen)
• A study or home office (no sleeping accommodation)
• Staff quarters that aren't self-contained

The test is whether the space could be used as a separate dwelling — not whether it's actually being used as one.

HMRC Enquiries on Past MDR Claims

HMRC has been actively investigating MDR claims, particularly where the definition of a 'dwelling' is debatable. If you claimed MDR on a past transaction and are now facing an HMRC enquiry, specialist advice is essential.

Common issues HMRC challenges include:

• Whether an annexe is truly independent from the main house
• Whether a space has sufficient facilities to be a dwelling
• Whether annexes connected to the main house by an internal door qualify
• Whether the annexe could realistically be let separately

What Alternatives Remain After Abolition?

With MDR abolished, buyers of properties with annexes or multiple dwellings have limited remaining reliefs:

• Mixed-use treatment: If the property includes genuinely non-residential elements, the entire transaction may be classified as mixed-use, applying lower non-residential SDLT rates. This requires a separate, independent non-residential element — a high bar.
• Non-residential rates for certain purchases: If the property is purchased as an investment (not as a main residence) and qualifies as non-residential, non-residential rates may apply.
• Transitional MDR: As noted above, if the contract was exchanged before 6 March 2024, MDR may still be available.

The abolition of MDR makes specialist SDLT advice more important than ever. Many conveyancers are not aware of all available reliefs, and the loss of MDR means the remaining alternatives require careful analysis.

Get Specialist SDLT Advice

Whether you're looking to make a retrospective MDR claim, navigating an HMRC enquiry on a past claim, or exploring alternative reliefs for a new purchase, our specialist SDLT advisers can help. We work with individuals, developers, and their conveyancers to ensure all available reliefs are identified and claimed.

Contact Newshams Tax Advisers on 0800 211 8657 or email enquiries@newshams.com for a confidential, no-obligation discussion.

---

This article was updated on 5 July 2026 to reflect the abolition of Multiple Dwellings Relief from 1 June 2024 and the current position on transitional provisions and retrospective claims.