MDR is calculated using residential LBTT rates and bands, in line with LBTT(S) A 2013 schedule 5 part 4
Overview of MDR Calculations
MDR is calculated by considering the tax attributable to each dwelling rather than treating the transaction as a single purchase. The calculation can reduce the tax due on the dwelling element of the transaction, but it does not reduce any ADS liability and cannot reduce the overall liability below the minimum prescribed amount.
There are two possible calculation approaches depending on whether ADS (Additional Dwelling Supplement) applies.
Where ADS applies, DT becomes ΣDT (the sum of the tax due in relation to each dwelling). ADS must be included in the calculation for any dwelling to which ADS applies. The amount payable is then calculated by comparing (ΣDT + RT) with (MPA + RT). MDR does not reduce the ADS amount.
Key terminology
- Total consideration: Total price paid for transaction
- Dwellings: Residential properties in the purchase
- Remaining property: Any non-residential part (e.g. shop, land)
- ND: Number of dwellings
- DT: tax on one “average” dwelling
- RT: Tax on any non-residential part
- ∑: sum of (total) for tax due when the ADS applies
- TT: Total tax without MDR
- MPA: Minimum tax rule
Formulas used for calculating the MDR
Multiple Dwellings Relief calculation - no ADS payable
(DT x ND) + RT
- DT = tax due on one dwelling (based on the average consideration)
- ND = number of dwellings
- RT = tax due on any remaining (non-residential or mixed) property
Multiple Dwellings Relief calculation – with ADS payable
ΣDT + RT
- ΣDT = total tax due across all dwellings
- This may differ per dwelling (e.g. where replacement of a main residence applies)
- RT = tax due on remaining property
MPA - Minimum prescribed amount
A minimum tax threshold applies.
MPA = 25% x (TT – RT)
(i.e. 25% of the tax attributable to the dwellings)
- TT = total LBTT if MDR had not been claimed
- RT = tax due on remaining property
The minimum prescribed amount is provided for in The Land and Buildings Transaction Tax (Prescribed Proportions) (Scotland) Order 2014
Calculating remaining property tax (RT)
To calculate RT:
- Calculate TT (total tax without MDR)
- Determine the proportion of consideration attributable to remaining property:
Remaining consideration ÷ Total consideration
- Multiply this proportion by TT:
RT = TT x proportion
Final tax payable
The amount of tax payable = the higher of:
- (DT x ND) + RT (where ADS applies this becomes ΣDT + RT)
or
- MPA + RT
MDR relief amount
MDR Relief = TT – Final LBTT payable
Step-by-step guidance
Calculating DT (tax due in relation to a dwelling)
- Determine the total consideration attributable to dwellings (on a just and reasonable basis), including consideration from linked transactions where applicable.
- Divide this amount by the total number of dwellings to obtain the average consideration per dwelling.
- Calculate LBTT on that average amount using residential rates and bands, treating it as a standalone (non-linked) transaction.
- The result is DT.
- Multiply DT by the number of dwellings (ND) to calculate the tax attributable to the dwelling element of the transaction.
Note: Where ADS applies, ensure any relevant relief (e.g. 6+ dwellings treatment) is reflected.
If the ADS applies
- MDR can still be claimed where ADS applies.
- If 6 or more dwellings are purchased in a single transaction and treated as non-residential, ADS does not apply.
- Where ADS applies to all dwellings, DT becomes ∑DT (sum of the tax due for each dwelling).
Calculating ∑DT
- Calculate the average consideration per dwelling (as for DT).
- Calculate LBTT on the average consideration using residential rates.
- Add ADS to each applicable dwelling calculation.
- Add together the tax due for all dwellings.
The result is ∑DT.
Note: If ADS applies to some dwellings but not others (for example, where a dwelling is a replacement main residence), calculate the tax due for each dwelling separately using the average consideration. Apply ADS only to the dwellings for which it is due and total the results to arrive at ∑DT.
Calculating TT (Total Tax)
TT is the total tax that would be due if MDR were not claimed.
- Calculate LBTT on the total consideration using the appropriate rates and bands.
- Where 6 or more dwellings are treated as non-residential, use non-residential rates.
Calculating RT (Tax Due on Remaining Property)
- Calculate the tax due on the transaction before MDR.
- Divide the consideration attributable to remaining property by the total chargeable consideration.
- Multiply the result from step 1 by the proportion calculated in step 2.
The result is RT.
Calculating MPA (Minimum prescribed amount)
- Calculate TT (the total tax due without MDR).
- Calculate RT (the tax attributable to any remaining property).
- Subtract RT from TT: TT − RT
- Multiply the result by 25%: MPA = 25% × (TT − RT)
The result is MPA.
Note: Where there is no remaining property, RT will be nil and the calculation becomes:
MPA = 25% × TT
Determining the final LBTT payable
Once the MDR calculation and the MPA calculation have been completed:
- Calculate the MDR amount:
- (DT × ND) + RT, or
- ΣDT + RT where ADS applies.
- Calculate MPA + RT.
- Compare the two results.
- The final LBTT payable is the higher amount.
This ensures that the tax payable is not reduced below the minimum prescribed amount.
Calculating MDR relief
- Calculate TT (the total tax due without MDR).
- Calculate the Final LBTT Payable.
- Subtract the Final LBTT Payable from TT: MDR Relief = TT − Final LBTT Payable
The result is the amount of MDR obtained.
Checking whether MDR is beneficial
- Calculate TT (LBTT without MDR).
- Calculate the Final LBTT Payable using the MDR rules.
- Compare the two amounts.
If:
Final LBTT Payable is less than TT
MDR provides a tax saving.
If:
Final LBTT Payable is equal to or greater than TT
MDR does not provide a tax advantage.
Note: The amount of MDR available is affected by the minimum prescribed amount. In some cases, the MPA may significantly reduce the tax saving that would otherwise arise from MDR.
Key definitions
- Attributable consideration: must be apportioned on a just and reasonable basis
- Linked transaction: treated collectively when determining total consideration
Important notes
- MDR is optional – it is not always beneficial
- MDR may reduce the calculated tax to nil; however, the final liability will be subject to the minimum prescribed amount, which sets a lower limit
- Retain evidence and workings supporting the MDR calculation, as Revenue Scotland may request these
- Taxpayers should compare:
- LBTT with MDR
- LBTT without MDR
The LBTT Calculator can help with each step.
Examples
A relevant transaction takes place which includes 4 dwellings. The ADS is due on all dwellings. The total consideration is £1,200,000.
The amount of tax due in relation to the transaction is:
(DT x ND) + RT
DT is the tax due in relation to a dwelling
ND is the number of dwellings
RT is the tax due in relation to remaining property
∑DT is the sum of tax due when the ADS is applicable
Calculating DT
- Calculate the total consideration attributable to all dwellings for the transaction
Dwellings consideration is £1,200,000
- Divide the total consideration attributable to dwellings by the total number of dwellings, this gives you the average consideration for a dwelling
Average consideration £1,200,000 / ND 4 = £300,000
- Calculate the tax due for the average consideration arrived at above using the tax rates and bands for residential property (tax rates and bands for residential property are used regardless of how many dwellings are being acquired) and as though the transaction was not a linked transaction.
Residential rates and bands:
| Up to £145,000 | Nil Rate Band | £0.00 |
| Above £145,000 to £250,000 | 2% | £105,000 x 2% =£2100 |
| Above £250,000 to £325,000 | 5% | £50,000 x 5% = £2500 |
| LBTT due on each dwelling | £4600 | |
| ADS due on each dwelling | 8% | £24,000 |
| Total per dwelling (DT) | £28,600 |
The result is the tax due in relation to a dwelling (DT).
You must then multiply DT by the number of dwellings (ND) that are, or form part of, the main subject-matter of the transaction.
DT (Tax Due) x ND (number of dwellings) = ∑DT
∑DT = £28,600 x 4 £114,400
Total tax due if it were not for the relief (TT)
Total consideration £1,200,000
Residential rates and bands:
| Up to £145,000 | Nil rate band | £0.00 |
| Above £145,000 to £250,000 | 2% | £105,000 x 2% =£2100 |
| Above £250,000 to £325,000 | 5% | £75,000 x 5% =£3750 |
| Above £325,000 to £750,000 | 10% | £425,000 x 10% =£42,500 |
| Above £750,000 | 12% | £450,000 x 12% =£54,000 |
| ADS | 8% | £96,000 |
| Total Tax (TT) | £198,350 |
Calculating MPA
To calculate the minimum prescribed amount, MPA:
- calculate the TT, as per section, Total tax due if it were not for the relief (TT)
£198,350 (please see above)
- calculate the RT, as per section, Tax due in relation to remaining property other than dwellings (RT)
£0.00 there are no other properties in this transaction
- take the TT figure less the RT figure, TT-RT
£198,350 – 0.00 = ££198,350
- multiple the result of TT-RT by 25%
£198,350 x 25% = £49,587.50
This results in the MPA figure.
Comparing (DT X ND) or ∑DT with MPA
MPA (49,587.50) + RT (0.00) = £49,587.50
∑DT = £114,400
Where DT x ND (or ∑DT) is less than the minimum prescribed amount, the amount of tax chargeable in relation to the relevant transaction is MPA + RT.
The relief
The figure to claim as a relief can be calculated once it has been ascertained which of the following is applicable:
- (DT x ND) + RT
- ∑DT + RT, when the ADS is applicable
- MPA + RT
Using the applicable higher figure, the relief is reached by subtracting this from, TT, the total tax due in absence of the relief.
MDR = £198,350 - £114,400 = £83,950
The tax due
The amount due will be the higher of (DT or ∑DT) + RT and MPA + RT.
MPA + RT £49,587.50
vs.
(DT or ∑DT) + RT £114,400
A relevant transaction takes place which includes 4 dwellings. The ADS is due on only three dwellings, with the remaining dwelling being a replacement of a main residence.
The total consideration is £1,200,000 the main residence is valued at £650,000.
The amount of tax due in relation to the transaction is:
(DT x ND) + RT
DT is the tax due in relation to a dwelling
ND is the number of dwellings
RT is the tax due in relation to remaining property
∑DT is the sum of tax due when the ADS is applicable
Calculating DT
- Calculate the total consideration attributable to all dwellings for the transaction
Dwellings consideration is £1,200,000
- Divide the total consideration attributable to dwellings by the total number of dwellings, this gives you the average consideration for a dwelling
Average consideration £1,200,000 / ND 4 = £300,000
- Calculate the tax due for the average consideration arrived at above using the tax rates and bands for residential property (tax rates and bands for residential property are used regardless of how many dwellings are being acquired) and as though the transaction was not a linked transaction.
Residential rates and bands:
| Up to £145,000 | Nil rate band | £0.00 |
| Above £145,000 to £250,000 | 2% | £105,000 x 2% =£2100 |
| Above £250,000 to £325,000 | 5% | £50,000 x 5% = £2500 |
| LBTT due on each flat | £4600 | |
| Dwelling 1 = LBTT with no ADS | £4600 | |
| Dwelling 2 = LBTT | £4600 | |
| ADS £300,000 x 8% | £24,000 | £28,600 |
| Dwelling 3 = LBTT | £4600 | |
| ADS £300,000 x 8% | £24,000 | £28,600 |
| Dwelling 4 = LBTT | £4600 | |
| ADS £300,000 x 8% | £24,000 | £28,600 |
| ∑DT = £4600 + £28,600 + £28,600 + £28,600 | £90,400 | |
| Total tax due if it were not for the relief (TT) | ||
| Total consideration £1,200,000 | ||
Residential rates and bands:
| Up to £145,000 | Nil rate band | £0.00 |
| Above £145,000 to £250,000 | 2% | £105,000 x 2% = £2100 |
| Above £250,000 to £325,000 | 5% | £75,000 x 5% = £3750 |
| Above £325,000 to £750,000 | 10% | £425,000 x 10% = £42,500 |
| Above £750,000 | 12% | £450,000 x 12% = £54,000 |
| ADS on £550,000 | 8% | £44,000 |
| Total tax (TT) | £146,350 |
Calculating MPA
To calculate the minimum prescribed amount, MPA:
- calculate the TT, as per section, Total tax due if it were not for the relief (TT)
£146,350 (please see above)
- calculate the RT, as per section, Tax due in relation to remaining property other than dwellings (RT)
£0.00 there are no other properties in this transaction
- take the TT figure less the RT figure, TT-RT
146,350 – 0.00 = £146,350
- multiple the result of TT-RT by 25%
£146,350 x 25% = £36,587.50
This results in the MPA figure.
Comparing (DT X ND) or ∑DT with MPA
MPA (36587.50) + RT (0.00) = £36,587.50
∑DT = £90,400
Where DT x ND (or ∑DT) is less than the minimum prescribed amount, the amount of tax chargeable in relation to the relevant transaction is MPA + RT.
The relief
The figure to claim as a relief can be calculated once it has been ascertained which of the following is applicable:
- (DT x ND) + RT
- ∑DT + RT, when the ADS is applicable
- MPA + RT
Using the applicable higher figure, the relief is reached by subtracting this from, TT, the total tax due in absence of the relief.
MDR = 146,350 - 90,400 = £55,950
The tax due
The amount due will be the higher of (DT or ∑DT) + RT and MPA + RT.
MPA + RT £36,587.50
vs.
(DT or ∑DT) + RT £90,400
Green buys a house with a separate cottage in the grounds in one transaction. The total cost is £935,000.
The cottage is valued at £225,000 on a just and reasonable apportionment. The ADS is due only on the cottage as the house is a replacement main residence, the previous main residence has already been sold.
The amount of tax due in relation to the transaction is:
(DT x ND) + RT
DT is the tax due in relation to a dwelling
ND is the number of dwellings
RT is the tax due in relation to remaining property (there is no other property in this case)
∑DT is the sum of tax due when the ADS is applicable
Calculating DT
- Calculate the total consideration attributable to all dwellings for the transaction
Dwellings consideration is £935,000
- Divide the total consideration attributable to dwellings by the total number of dwellings, this gives you the average consideration for a dwelling
Average consideration £935,000 / ND 2 = £467,500
- Calculate the tax due for the average consideration arrived at above using the tax rates and bands for residential property (tax rates and bands for residential property are used regardless of how many dwellings are being acquired) and as though the transaction was not a linked transaction.
Residential rates and bands:
| Up to £145,000 | Nil Rate Band | £0.00 |
| Above £145,000 to £250,000 | 2% | £105,000 x 2% = £2100 |
| Above £250,000 to £325,000 | 5% | £75,000 x 5% = £3750 |
| Above £325,000 to £750,000 | 10% | £142,500 x 10% = £14,250 |
| Dwelling 1 = LBTT with no ADS | £20,100 | |
| Dwelling 2 = LBTT | £20,100 | |
| Dwelling 2 the ADS £467,500 | 8% | £37,400 |
The result is the tax due in relation to a dwelling (DT).
You must then multiply DT by the number of dwellings (ND) that are, or form part of, the main subject-matter of the transaction. In the case of ADS being due on some but not all dwelling the ∑DT is used, adding each DT
DT (Tax Due) on each of the ND (number of dwellings) = ∑DT
∑DT = £20100 + (£20100 + £37,400) £77,600
Total tax due if it were not for the relief (TT)
Total consideration £935,000
Residential rates and bands:
| Up to £145,000 | Nil Rate Band | £0.00 |
| Above £145,000 to £250,000 | 2% | £105,000 x 2% =£2100 |
| Above £250,000 to £325,000 | 5% | £75,000 x 5% = £3750 |
| Above £325,000 to £750,000 | 10% | £425,000 x 10% = £42,500 |
| Above £750,000 | 12% | £185,000 x 12% = £22,200 |
| ADS on £225,000 | 8% | £18,000 |
| Total Tax (TT) | £88,550 |
Calculating MPA
To calculate the minimum prescribed amount, MPA:
- calculate the TT, as per section, Total tax due if it were not for the relief (TT)
£88,550 (please see above)
- calculate the RT, as per section, Tax due in relation to remaining property other than dwellings (RT)
£0.00 there are no other properties in this transaction
- take the TT figure less the RT figure, TT-RT
88,550 – 0.00 = £88,550
- multiple the result of TT-RT by 25%
£88,550 x25% = £22,137.50
This results in the MPA figure.
Comparing (DT X ND) or ∑DT with MPA
MPA (22,137.50) + RT (0.00) = £22,137.50
∑DT = £77,600
Where DT x ND (or ∑DT) is less than the minimum prescribed amount, the amount of tax chargeable in relation to the relevant transaction is MPA + RT.
The relief
The figure to claim as a relief can be calculated once it has been ascertained which of the following is applicable:
- (DT x ND) + RT
- ∑DT + RT, when the ADS is applicable
- MPA + RT
Using the applicable higher figure, the relief is reached by subtracting this from, TT, the total tax due in absence of the relief.
MDR = 88550-77,600 = £10,950
The tax due
The amount due will be the higher of (DT or ∑DT) + RT and MPA + RT.
MPA + RT £22,137.50
vs.
(DT or ∑DT) + RT £77,600
For further guidance see:
Tax due in relation to remaining property other than dwellings (RT)
RT is the tax that is due on remaining property which is any property within the transaction that is not a dwelling. The RT figure is calculated as part of the total tax due were it not for the relief.
To calculate the tax due in relation to remaining property, RT, use the following steps:
- Calculate the amount of tax that would be due in respect of the transaction in the absence of this relief, as at, Total tax due if it were not for the relief (TT)
- Divide the consideration attributable to remaining property by the total chargeable consideration for the transaction, this will result in a fraction 0.XX
- Multiply the amount calculated in step 1 by the figure reached in step 2.
The figure reached at step 3 is the tax due for remaining property RT.
For further guidance see:
The amount of tax chargeable in relation to a transaction where the ADS does not apply is:
Total tax due if it were not for the relief (TT)
TT is the total tax due on the total consideration for all dwellings and other property were it not for the relief. This figure is used both to calculate the tax due on remaining property and to calculate the amount to claim as MDR.
To calculate the total tax due, TT:
- take the total consideration for all dwellings and other property in the transaction or linked transactions
- calculate the tax due using the relevant rates and bands for the transaction as if no relief were due
- where the ADS is applicable, this should be calculated for the additional dwellings and included in the total tax due figure
- in the case of 6+ dwellings in one transaction, these are treated as non-residential and so use non-residential rates and bands and the ADS is not included.
The minimum prescribed amount of tax (MPA)
There is a minimum prescribed amount (MPA) chargeable when calculating MDR. This is currently 25% of the total tax chargeable in relation to dwellings if no relief were due.
To calculate the minimum prescribed amount, MPA:
- calculate the TT, as per section, Total tax due if it were not for the relief (TT)
- calculate the RT, as per section, Tax due in relation to remaining property other than dwellings (RT)
- take the TT figure less the RT figure, TT-RT
- multiple the result of TT-RT by 25%
This results in the MPA figure.
Where DT x ND or ∑DT is less than the calculated MPA, the amount of tax chargeable in relation to the transaction is instead MPA + RT.
The relief figure
The figure to claim as a relief can be calculated once it has been ascertained which of the following is applicable:
- (DT x ND) + RT
- ∑DT + RT, when the ADS is applicable
- MPA + RT
Using the applicable higher figure, the relief is reached by subtracting this from, TT, the total tax due in absence of the relief.
Therefore the amount of MDR due will be the difference between TT and (DT or ∑DT or MPA) + RT.
Amount payable
The amount due will be the higher of (DT or ∑DT) + RT and MPA + RT.
The amount of MDR due will be the difference between TT and (DT or ∑DT or MPA) + RT
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
Evidence of how you have reached your calculation for MDR should be retained and available as Revenue Scotland may ask for sight of this.
For further guidance see:
Green Ltd acquires 8 flats with 2 ground floor shop units for £1,250,000. The chargeable consideration attributable to the shops is apportioned on a just and reasonable basis to be £250,000.
As this transaction involves the acquisition of six or more dwellings, relief for purchases of six or more dwellings will be available therefore Additional Dwelling Supplement (ADS) will not be included in any part of this calculation if the relief is claimed.
The amount of tax due in relation to the transaction is:
(DT x ND) + RT
DT is the tax due in relation to a dwelling
ND is the number of dwellings
RT is the tax due in relation to remaining property
Calculating DT
- Calculate the total consideration attributable to all dwellings for the transaction
Dwellings consideration is £1,000,000
- Divide the total consideration attributable to dwellings by the total number of dwellings, this gives you the average consideration for a dwelling
Average consideration £1,000,000 / ND 8 = £125,000
- Calculate the tax due for the average consideration arrived at above using the tax rates and bands for residential property (tax rates and bands for residential property are used regardless of how many dwellings are being acquired) and as though the transaction was not a linked transaction.
Up to £145,000 Nil Rate Band £0.00
As the average consideration for each dwelling is within the nil rate band:
Tax due on each dwelling (DT) £0.00
The result is the tax due in relation to a dwelling (DT).
You must then multiply DT by the number of dwellings (ND) that are, or form part of, the main subject-matter of the transaction.
DT (Tax Due) x ND (number of dwellings)
= £0.00 x 8 £0.00
Calculating RT
RT is the tax that is due on remaining property which is any property within the transaction that is not a dwelling. The RT figure is calculated as part of the total tax due were it not for the relief.
To calculate the tax due in relation to remaining property, RT, use the following steps:
- Calculate the amount of tax that would be due in respect of the transaction in the absence of this relief, as at, Total tax due if it were not for the relief (TT)
The 8 flats and 2 shops £1,250,000 at non-residential rates.
| Up to £150,000 | Nil Rate Band | £0.00 |
| Above £150, 000 to £250,000 | 1% | £100,000 x 1% = £1000 |
| Above £250,000 | 5% | £1000000 x 5% = £50,000 |
| LBTT | £51,000 |
The total tax chargeable for the transaction, based on a chargeable consideration of £1,250,000 calculated at non-residential rates, is therefore £51,000.
- Divide the consideration attributable to remaining property by the chargeable consideration for the transaction, this will result in a fraction 0.XX
250,000 / 1,250,000 = 0.20
- Multiply the amount calculated in step 1 by the figure reached in step 2.
£51,000 x 0.20 = £10,200 the tax due in relation to remaining property (RT).
Under Step 1 the TT is £51,000
RT is £10,200
Calculating MPA
To calculate the minimum prescribed amount, MPA:
- calculate the TT, as per section, Total tax due if it were not for the relief (TT)
£51,000 (please see above)
- calculate the RT, as per section, Tax due in relation to remaining property other than dwellings (RT)
£10,200 (please see above)
- take the TT figure less the RT figure, TT-RT
51,000 – 10,200 = £40,800
- multiple the result of TT-RT by 25%
£40,800 x 25% = £10,200
This results in the MPA figure.
Comparing (DT X ND) or ∑DT with MPA
MPA (10,200) + RT (10,200) = £20,400
DT = £0.00
Where DT x ND (or ∑DT) is less than the minimum prescribed amount, the amount of tax chargeable in relation to the relevant transaction is MPA + RT.
The Relief
The figure to claim as a relief can be calculated once it has been ascertained which of the following is applicable:
- (DT x ND) + RT
- ∑DT + RT, when the ADS is applicable
- MPA + RT
Using the applicable higher figure, the relief is reached by subtracting this from, TT, the total tax due in absence of the relief.
MDR = 51,000 – 20,400 = £30,600
The Tax Due
The amount due will be the higher of (DT or ∑DT) + RT and MPA + RT.
MPA + RT £20,400
vs.
(DT or ∑DT) + RT £0.00
Green Ltd acquires 2 flats with 2 ground floor shop units for £1,250,000. The chargeable consideration attributable to the shops is apportioned on a just and reasonable basis to be £250,000.
The amount of tax due in relation to the transaction is:
(DT x ND) + RT
DT is the tax due in relation to a dwelling
ND is the number of dwellings
RT is the tax due in relation to remaining property
∑DT is the sum of tax due when the ADS is applicable
Calculating DT
- Calculate the total consideration attributable to all dwellings for the transaction
Dwellings consideration is £1,000,000
- Divide the total consideration attributable to dwellings by the total number of dwellings, this gives you the average consideration for a dwelling
Average consideration £1,000,000 / ND 2 = £500,000
- Calculate the tax due for the average consideration arrived at above using the tax rates and bands for residential property (tax rates and bands for residential property are used regardless of how many dwellings are being acquired) and as though the transaction was not a linked transaction.
Residential rates and bands:
| Up to £145,000 | Nil Rate Band | £0.00 |
| Above £145,000 to £250,000 | 2% | £105,000 x 2% = £2100 |
| Above £250,000 to £325,000 | 5% | £75,000 x 5% =£3750 |
| Above £325,000 to £750,000 | 10% | £175,000 x 10% = £17,500 |
| LBTT due on each flat | £23,350 | |
| ADS due on each dwelling | 8% | £40,000 |
| Tax due on each dwelling (DT) | £63,350 |
The result is the tax due in relation to a dwelling (DT).
You must then multiply DT by the number of dwellings (ND) that are, or form part of, the main subject-matter of the transaction.
DT (Tax Due) x ND (number of dwellings) = ∑DT
∑DT = £63,350 x 2 £126,700
Calculating RT
RT is the tax that is due on remaining property which is any property within the transaction that is not a dwelling. The RT figure is calculated as part of the total tax due were it not for the relief.
To calculate the tax due in relation to remaining property, RT, use the following steps:
- Calculate the amount of tax that would be due in respect of the transaction in the absence of this relief, as at, Total tax due if it were not for the relief (TT)
The 2 flats and 2 shops £1,250,000 at non-residential rates.
| Up to £150,000 | Nil Rate Band | £0.00 |
| Above £150, 000 to £250,000 | 1% | £100,000 x 1% = £1000 |
| Above £250,000 | 5% | £1000000 x 5% = £50,000 |
| LBTT due | £51,000 | |
| ADS due | 8% | £1000000 x 8% = £80,000 |
The total tax chargeable for the transaction, based on a chargeable consideration of £1,250,000 calculated at non-residential rates, is therefore £131,000.
- Divide the consideration attributable to remaining property by the total chargeable consideration for the transaction, this will result in a fraction 0.XX
250,000 / 1,250,000 = 0.20
- Multiply the amount calculated in step 1 by the figure reached in step 2.
£131,000 x 0.20 = £26,200 the tax due in relation to remaining property (RT).
Under Step 1 the TT is £131,000.
Calculating MPA
To calculate the minimum prescribed amount, MPA:
- calculate the TT, as per section, Total tax due if it were not for the relief (TT)
£131,000 (please see above)
- calculate the RT, as per section, Tax due in relation to remaining property other than dwellings (RT)
£26,200 (please see above)
- take the TT figure less the RT figure, TT-RT
131,000 – 26,200 = £104,800
- multiple the result of TT-RT by 25%
£104,800 x 25% = £26,200
This results in the MPA figure.
Comparing (DT X ND) or ∑DT with MPA
MPA (26,200) + RT (26,200) = £52,400
∑DT = £126,700
Where DT x ND (or ∑DT) is less than the minimum prescribed amount, the amount of tax chargeable in relation to the relevant transaction is MPA + RT.
The Relief
The figure to claim as a relief can be calculated once it has been ascertained which of the following is applicable:
- (DT x ND) + RT
- ∑DT + RT, when the ADS is applicable
- MPA + RT
Using the applicable higher figure, the relief is reached by subtracting this from, TT, the total tax due in absence of the relief.
MDR = 131,000 - 152,900 = -21,900
The MDR in this instance does not reduce the LBTT payable.
The Tax Due
The amount due will be the higher of (DT or ∑DT) + RT and MPA + RT.
MPA + RT £52,400
vs.
(DT or ∑DT) + RT £152,900