Highlights: Updated HMRC guidance on what is a "dwelling" and higher rates on the replacement of a main residence. A reminder that Welsh properties are subject to LTT, not SDLT. HMRC clarifies how to treat leases for SDLT.

This update covers our pick of the highlights of recent changes to:

  • Stamp Duty Land Tax (SDLT) (tax on land and property)
  • Stamp Duty and Stamp Duty Reserve Tax (tax on shares and securities)

New guidance for the definition of “dwelling”

For SDLT purposes, the definition of residential property includes a building that is used or suitable for use as a dwelling, or one that is in the process of being constructed or adapted for such use (see Section 116 (1) (a) of the Finance Act 2003).

HMRC has updated its guidance to help explain how it interprets this definition. 

"HMRC interpret ‘dwelling’ as a building or part of a building that affords those who use it both the facilities required for day-to-day private domestic existence and a sufficient degree of permanence. In all cases, the definition should be tested at the effective date of the transaction… but long-standing past use will also be considered.”

The new guidance goes on to give examples of relevant factors pointing towards a building being, and not being, a dwelling, states that future planned use is irrelevant, and sets out how to deal with mixed-use properties.

See SDLT: Higher rate: what is a dwelling?

There is also additional new guidance at SDLTM00410 onwards which explains the factors HMRC will consider when deciding how many dwellings have been acquired. This should give further clarity when considering whether ‘multiple dwellings relief’ is due.

See SDLT: Annexes and multiple dwelling relief

Minor changes to existing guidance

Other changes to the Stamp Duty Land Tax manual in the last 3 months include:


The guidance has been changed to remove part of a sentence that read "and provided the couple are still `living together’ when the new property is bought" when considering condition D (replacement of the main residence) to see if the higher rate for additional dwellings applies. There is no requirement in the legislation, when the disposal of the old main residence was by a spouse or civil partner rather than by the buyer themselves, for the buyer and that same spouse or civil partner to be still living together when the new property is bought, for the replacement residence condition to be met and the higher rate avoided on its purchase.

See SDLT: Residential property (dwellings): higher rate

SDLT Repayments

HMRC advise that to avoid delays and ensure repayments can be issued as quickly as possible, you must give the following information when writing to HMRC to ask for a repayment:

  • bank name
  • account number
  • sort code
  • name of account holder

If you are an agent and the repayment is to be sent to you rather than to your client, you must provide authorisation from them explicitly stating that this is acceptable.

Welsh transactions

  • Land Transaction Tax (LTT) was introduced on 1 April 2018. This means that any transaction relating to land in Wales should be notified to the Welsh Revenue Authority (WRA).
  • HMRC are still getting returns and payments which should have been sent to the WRA. Errors are being made on these returns which have allowed HMRC to accept them, such as the land address given being in Wales but the local authority code quoted relating to England.
  • Make sure that if you are dealing with a Welsh transaction dated on or after 1 April 2018, you file and make payment to the WRA.

See Welsh Land Transaction Tax (LTT)

SDLT Returns with more than one property

If you file your SDLT return online, the electronic SDLT5 certificate shows details of the first property address for any transaction. HMRC advise that:

  • If there are multiple addresses, or multiple sellers/buyers, access the ‘view, print and store’ section of the online return, print a PDF version and send it to the Land Registry with the SDLT5.
  • You do not need to write to HMRC to ask for a separate certificate for each property.

Leases for an indefinite term

HMRC have confirmed that:

  • Where the term of a lease cannot be ascertained at grant, it is treated for SDLT purposes as initially for one year and SDLT is calculated on that basis.
  • If the lease continues after the first-year additional SDLT and further returns may be needed at the end of each extended year.

Leases that continue after a fixed term

  • Where a lease is granted for a fixed term or a term determined by a fixed notice period SDLT is due on that known term.
  • Where the tenant remains in occupation after the term ends, additional SDLT and further returns may be needed at the end of each extended year.

See SDLT: Leases

Stamp Duty and Stamp Duty Reserve Tax (SD and SDRT)

Responsibility for notifying and paying SDRT

Stamp Duty Reserve Tax (SDRT) legislation specifies who the ‘accountable person’ is.

  • HMRC had advised they are aware that, for commercial reasons, the market practice is often for someone other than the accountable person to notify and pay the tax due, but such arrangements do not affect who the accountable person is.
    • If notification or payment, or both, of SDRT is not made, or is made late, the liability for any underpaid SDRT, and related interest or penalty charges remains with the accountable person and this is who HMRC will chase for any late notifications and unpaid tax.

Useful guides to Stamp Duty Land Tax

Visit our Land and Property section

Latest HMRC Stamp taxes Newsletter (external link)