HMRC stamp duty clarification to give landlords significant rebate windfalls

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Landlords who have bought mixed-use properties could be due a big windfall after HMRC clarified stamp duty payment rules

HMRC says that when claiming the relief on purchases of mixed-use buildings, tax should be calculated without using the 3% surcharge, even for purchases made by companies.

This means that the effective tax rate might be lower than 3% and those who claimed the relief within the last four years (having paid tax including the 3% surcharge) are due a refund.

When buying a building with retail premises and four flats above it for £1.5m, landlords will now save £27,000 in stamp duty surcharges, according to tax advisers Blick Rothenberg.

If the commercial unit is worth £150,000 and the residential units worth £1.35m, then £19,950 of stamp duty would be payable – made up of £13,500 due on the flats plus £6,450 on the retail premises.

In the past, £40,500 would have been charged on the residential properties, bringing the total tax bill up to £46,950.

The clarified rules will also make it more attractive for landlords to buy mixed use buildings in future, according to partner Sean Randall (pictured), who says it’s good news for buyers of mixed use buildings, irrespective of the size of the residential element.

He adds: “A significant tax saving may be due, for example on a single mixed use building containing four flats, as well as on a purpose-built private-rented sector development containing 2,000 flats.”

Read more about stamp duty.

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