Multiple dwellings relief (MDR) is available on most transactions that involve the purchase of more than one dwelling in a single transaction or in a series of linked transactions. The relief ensures the buyer does not pay LBTT at a higher rate than if bought separately and lower rate bands would have applied.
There is a prescribed minimum amount of LBTT in all MDR cases.
MDR will be available on most transactions that include multiple residential dwellings whether or not there is also non-residential property in one or more of the transactions.
For further guidance see:
Both multiple dwellings relief and the ADS relate to transactions which involve dwellings. This includes transactions with dwellings and additional property that is not classed as a dwelling.
Where the ADS is applicable, MDR may be available. MDR may also be available on the purchase of 6 or more residential properties bought in a single transaction even though these are relieved from the ADS and are treated as being non-residential.
Multiple dwellings relief can be claimed by:
- claiming the relief in the original LBTT return
- making an amendment to the LBTT return to claim the relief.
MDR cannot be claimed if crofting community right to buy relief is available on the transaction. MDR can also not be claimed if group relief, reconstruction relief and acquisition relief or charities relief is available for the transaction or was available and has been withdrawn from it.
The MDR can be withdrawn in full or in part should an event occur within a relevant period and, had the event occurred immediately before the effective date, the relief would not have been due.
MDR is calculated using residential rates and bands and follows steps as laid out in LBTT(S) A 2013 schedule 5 part 4
Multiple Dwellings Relief - no ADS payable
(DT x ND) + RT
DT = tax due on a dwelling (calculate using average consideration for number of dwellings – see below for more detail)
ND = number of dwellings
RT = tax due on remaining property (see below for more detail)
Multiple Dwellings Relief – with ADS payable
∑DT + RT
∑DT = sum of tax due on each dwelling (this may be the same as DT if ADS is due on all dwellings but may not be if there is a replacement of a previous main residence)
RT = tax due on remaining property
MPA - Minimum prescribed amount
MPA = (TT – RT) x 25%
TT = the amount of tax that would be due if MDR was not available
RT = the tax due in relation to the remaining property
Calculate RT = consideration for RT divided by total consideration (include dwellings and other property) multiply the result which will be 0.XX by the TT
Calculate the amount payable and relief due
The amount of tax payable will be the higher of:
(DT or ∑DT) + RT
MPA + RT
The amount of MDR due will be the difference between TT and (DT or ∑DT or MPA) + RT
DT - Calculate the tax due in relation to a dwelling
- Find the total consideration attributable to dwellings. In the case of linked transactions, this will be the total of the consideration attributable to dwellings across all transactions.
- Divide the answer by total dwellings. Total dwellings is the number of dwellings that formed part of the calculation at step 1.
- Calculate the amount of tax that would be due in relation to the transaction(s) as though the transaction was a residential property transaction, not a linked transaction and in accordance with the chargeable consideration arrived at under step 2.
The result is the tax due in relation to a dwelling.
If the ADS applies, step 3 takes account of any relief available if the transaction involves 6 or more dwellings.
RT - Calculate the tax due in relation to remaining property
- Calculate the amount of tax that would be due if MDR was not available
- Divide the consideration attributable to remaining property by the chargeable consideration for the transaction
- Multiply the amount at step 1 by the fraction reached in step 2.
The result is the tax due in relation to remaining property.
Attributable means attributable on a just and reasonable basis.
The minimum prescribed amount is provided for in The Land and Buildings Transaction Tax (Prescribed Proportions) (Scotland) Order 2014 (legislation.gov.uk).
Note: You will see in some cases claiming MDR is not beneficial, whether to claim or not is a decision for the buyer/s.
The LBTT calculator can help with each step: LBTT Calculator
For further guidance and examples see: Multiple dwellings relief technical guidance