Ennio buys 4 properties for £600,000. He will move into one of these as his next main residence and has also sold his previous main residence.
The ADS will apply to the purchase of 3 of the 4 dwellings and Ennio can claim Multiple Dwellings Relief (MDR). When calculating MDR DT, the LBTT due in relation to each dwelling, is calculated by attributing the average consideration for the transaction to each of the 4 dwellings and working out the tax due at residential LBTT rates. The average consideration is £150,000 and so LBTT due at residential rates is £100.
For 3 of the 4 dwellings, the 4% ADS has to be taken account of in the calculation of DT, so £6,000 is added to the calculation. Therefore, for 3 of the dwellings, DT is £6,100, but for one of the dwellings, the replacement main residence, DT is £100. This means that ∑DT is £18,400.
If this is greater than the minimum prescribed amount, this will be the LBTT payable for the transaction. The minimum prescribed amount is 25% on what the LBTT would have been absent of relief. LBTT of £33,350 is payable on a consideration of £600,000 at residential rates, and the ADS of £24,000 would also be payable. This gives a total of £57,350 and a minimum prescribed amount of £14,337. Total LBTT payable is therefore £18,400.