This relief is provided by the provisions of schedule 5 to the LBTT(S)A 2013 (as amended).

Worked examples on multiple dwellings relief are provided separately on our website under ‘LBTT Worked Examples’.

**Description of relief**

This is a form of partial relief from LBTT which ensures that where a taxpayer is buying multiple dwellings in a single transaction, the taxpayer is not taxed at a higher tax band when the transaction involves dwellings which, if bought separately, would fall into a lower tax band. This partial relief ensures that in all cases, a prescribed minimum amount of tax is paid on land transactions involving the acquisition of multiple dwellings.

The definition of a ‘residential property’ is set out in LBTT(S)A 2013 section 59.

The relief applies where the transaction includes 2 or more dwellings or 2 or more dwellings and other property. The relief also applies to linked transactions where a transaction involves a single dwelling and it is linked to one of a number of transactions and the main subject matter of at least one of the other transactions involves some other dwelling or dwellings or some other dwelling or dwellings and other property. The relief does not apply to land transactions which are leases for the purposes of schedule 19 to the LBTT(S)A 2013.

LBTT(S)A 2013 schedule 5 part 2

The relief does not apply where crofting community right to buy relief is available, or where group relief, reconstruction relief, acquisition relief, or charities relief is available or has been withdrawn.

LBTT(S)A 2013 schedule 5 paragraph 6

The Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016 has amended the calculation of multiple dwellings relief for cases where Additional Dwelling Supplement applies.

Please note that there is no change to the calculation where relief from ADS for purchases of six or more dwellings is claimed (see LBTT10040).

**Multiple Dwellings Relief - no ADS payable**

**Relief mechanism - the amount of tax due**

The amount of tax due on a transaction involving multiple dwellings is calculated by multiplying the tax due in relation to a dwelling (DT) by the number of dwellings (ND), then adding the tax due on any other property (RT).

i.e. The amount of tax due = (DT x ND) + RT

LBTT(S) A 2013 schedule 5 paragraph 10

**Tax due in relation to dwellings (DT)**

To calculate the tax due in relation to a dwelling (DT), firstly calculate the total consideration attributable to dwellings (or if it is a linked transaction, add the consideration attributable to dwellings to the consideration attributable to dwellings for all other relevant transactions).

Then divide the total consideration attributable to dwellings by the total number of dwellings. This gives you the average consideration for all the dwellings.

Then calculate the tax due for that average consideration using the tax rates and bands for residential property (see LBTT4009), assuming the transaction is not a linked transaction. Tax rates and bands for residential property are used for calculating the tax due subject to the relief regardless of how many dwellings are being acquired.

This sum is then multiplied by the number of dwellings (ND) that are, or form part of, the transaction. This gives the total amount of tax payable for the dwelling element of the transaction.

**Tax due in relation to property other than dwellings (RT)**

Adding the total amount of tax payable for the dwelling element to the amount of tax due in relation to remaining property gives the total amount of tax payable.

To calculate the tax due on property other than dwellings (RT), calculate the amount of tax that would be due on the transaction in the absence of this relief (figure 1). Divide the consideration attributable to remaining property by the chargeable consideration for the transaction as a whole (that fraction being figure 2), then multiply figure 1 by figure 2.

The result is the amount of tax due in relation to remaining property.

**Applying the minimum prescribed amount of tax to the part of the transaction relating to dwellings**

The total amount of tax payable in relation to dwellings cannot be assessed at less than a minimum prescribed amount of 25% of the total amount of tax chargeable in relation to the dwellings in the absence of the relief.

So if the result of the tax calculation in relation to the dwellings (DT x ND) shows that the total amount of tax payable is less than 25% of the total amount of tax chargeable for the dwellings in the absence of the relief, then the amount of tax payable in relation to the dwellings must be assessed at 25% of the total amount of tax chargeable on the dwellings for the transaction in the absence of the relief. Any tax on remaining property is then added to find the total amount of tax due on the whole transaction.

i.e. where DT x ND is less than the minimum prescribed amount, the amount of tax chargeable in relation to the relevant transaction is:

**MPA + RT**

where:

MPA is the minimum prescribed amount; and

RT is the tax due in relation to remaining property

If six or more dwellings form a single transaction, those dwellings are treated as not being residential property. Thus the non-residential tax rates and bands apply (see LBTT4011).

**Multiple Dwellings Relief - ADS payable**

**Relief mechanism - the amount of tax due**

The amount of tax due on a transaction involving multiple dwellings is calculated by determining the tax due in relation to the dwellings, including any ADS (∑DT), then adding the tax due on any other property (RT).

The amount of tax due = ∑DT+ RT

LBTT(S) A 2013 schedule 5 paragraph 10A (as amended by (LBTT(A)(S) A 2016)

**Tax due in relation to dwellings (∑DT)**

To calculate the tax due in relation to a dwelling (DT), firstly calculate the total consideration attributable to dwellings (or if it is a linked transaction, add the consideration attributable to dwellings to the consideration attributable to dwellings for all other relevant transactions).

You must then divide the total consideration attributable to the dwellings by the total number of dwellings. This gives you the average consideration per dwelling.

Then calculate the tax due on the average consideration using the tax rates and bands for residential property (see LBTT4009), assuming the transaction is not a linked transaction. If ADS is due on the dwelling, you must also apply 4% to the **average consideration**.

Tax rates and bands for residential property are used for calculating the tax due subject to the relief regardless of how many dwellings are being acquired.

Where all the dwellings are subject to ADS, ∑DT can be calculated by multiplying the tax due per dwelling, as determined above, by the number of dwellings.

If however ADS is due on some but not all of the dwellings, for instance where a main residence is being replaced (see LBTT10020) and other dwellings are being acquired as part of the same transaction, you will need to calculate the tax due on each dwelling individually and add them together to arrive at ∑DT.

**Tax due in relation to property other than dwellings (RT)**

Adding the total amount of tax payable for the dwelling element to the amount of tax due in relation to remaining property gives the total amount of tax payable.

To calculate the tax due on property other than dwellings (RT), calculate the amount of tax that would be due on the transaction in the absence of this relief, **including any ADS payable** (figure 1). Divide the consideration attributable to remaining property by the chargeable consideration for the transaction as a whole (that fraction being figure 2), then multiply figure 1 by figure 2.

The result is the amount of tax due in relation to remaining property.

**Applying the minimum prescribed amount of tax to the part of the transaction relating to dwellings**

The total amount of tax payable in relation to dwellings cannot be assessed at less than a minimum prescribed amount of 25% of the total amount of tax chargeable in relation to the dwellings in the absence of the relief.

So if the result of the tax calculation in relation to the dwellings (∑DT) shows that the total amount of tax payable is less than 25% of the total amount of tax chargeable for the dwellings in the absence of the relief (including ADS), then the amount of tax payable in relation to the dwellings must be assessed at 25% of the total amount of tax chargeable on the dwellings for the transaction in the absence of the relief. Any tax on remaining property is then added to find the total amount of tax due on the whole transaction.

i.e. where ∑DT is less than the minimum prescribed amount, the amount of tax chargeable in relation to the relevant transaction is:

**MPA + RT**

where:

MPA is the minimum prescribed amount; and

RT is the tax due in relation to remaining property.

The minimum prescribed amount (MPA) is 25% of:

**TT − RT**

where:

TT is the amount of tax that would be due, including ADS, in respect of the transaction but for this schedule; and

RT is the tax due in relation to remaining property.

**Claiming the relief**

To claim this relief see the guidance on 'How to make a LBTT return and pay tax' which is available separately on our website.

**Withdrawal of the relief**

The relief is withdrawn in full if a change of circumstance or change of plan takes place within the ‘relevant period' and if that event had occurred immediately before the effective date, relief would not have been available.

LBTT(S)A 2013 schedule 5 paragraph 16

The relief is partially withdrawn if a change of circumstance or change of plan takes place within the ‘relevant period' and if that event had occurred immediately before the effective date, relief would have been available but more tax would have been payable. Tax is chargeable as if the event had occurred immediately before the effective date and is calculated by reference to the tax rates and bands in force at the effective date of the transaction.

LBTT(S)A 2013 schedule 5 paragraphs 18, 19 and 20

The 'relevant period' is the shorter of:

- the period ending three years after the effective date of the transaction; or
- the period beginning with the effective date of the transaction and ending with the date on which the buyer disposes of that dwelling to someone who is not connected with the buyer.

In the case of a transaction substantially performed before completion, the ‘relevant period’ runs from the date of substantial performance.

LBTT(S)A 2013 schedule 5 paragraphs 21 and 22

The recalculation of the tax due is based on the whole of the consideration given for the subject-matter of the transaction and the number of dwellings following the event, including any dwellings sold on prior to the event.

Where relief is withdrawn either partially or in full, the taxpayer must make a further LBTT return to us (see LBTT4022).

**Please note:** The ADS rate was changed to 4% with effect from 25 January 2019. The contract date and the effective date of your transaction will determine whether the changes affect you.

**ADS rates for transactions on or after 25 January 2019**

ADS is 4% of the ‘relevant consideration’ (usually the purchase price).

**ADS rates for transactions prior to 25 January 2019**

ADS is 3% of the ‘relevant consideration’ (usually the purchase price).

**Transitional Provision**

Where the effective date of a land transaction is on or after 25 January 2019 and the contract for the land transaction was entered into prior to 12 December 2018, the tax rate of 3% for ADS that was in force prior to 25 January 2019 will apply.

Further information can be found at LBTT10080.

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LBTT3015

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