In Hani and Diana Gabra v HMRC [2025] TC09473, the First Tier Tribunal (FTT) found that Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax (SDLT) purposes was not available on the purchase of a house with a separate annexe. The annexe lacked the facilities to meet basic domestic living needs.
On 23 June 2021, Hani and Diana Gabra (the taxpayers) purchased a Residential property in England.
- The 1.75-acre property included a large house and a separate building with an annexe connected to three stables.
- There was also a swimming pool and a pool room. The pool room contained a toilet and sink, however, the annexe did not.
- On 11 June 2021, before the acquisition date, the Gabras purchased items in readiness for installing a shower/toilet room and a kitchenette in the annexe.
- The taxpayer engaged a builder before completing the purchase.
- On the day of completion, but after the taxpayer had received the keys, the builder installed a separate bathroom and a kitchenette in the annexe.
- The taxpayer completed their Stamp Duty Land Tax (SDLT) return, claiming Multiple Dwellings Relief (MDR), on the basis that the property comprised two dwellings.
- Before the relief ceased on 1 June 2024, MDR was available if a building or part of a building was used or suitable for use as a single dwelling, or it was in the process of being constructed or adapted for such use.
- The taxpayer claimed that the annexe had been used before purchase by visitors and friends of the previous occupant and therefore was suitable for use as a single dwelling.
- If this argument was not accepted, they claimed that the purchase of items and engaging a builder showed that the annexe was in the process of being adapted.
- HMRC rejected the MDR claim on the basis that:
- The annexe was not suitable for use as a single dwelling because of the lack of a suitable kitchen to cook in and the need to access another building to use a toilet, shower and sink.
- The work to adapt the annexe did not happen until after the completion of the purchase.
- The taxpayers Appealed to the First Tier Tribunal (FTT).
The FTT found that:
- At the time of completion, the annexe was unsuitable for use as a single dwelling.
- Fiander and Brower v HMRC [2021] UKUT 301 established that suitability for use as a single dwelling is assessed by reference to suitability for occupants generally, not just a particular type of occupant.
- The FTT considered that while relatives or close friends might not need them, the lack of a toilet, sink and shower/bath meant the annexe did not have the facilities to meet basic domestic living needs, including personal and hygiene needs, for occupiers generally.
- The works to adapt the annexe had not begun at the time of completion.
- The FTT were persuaded by the principle taken in Ladson Preston Limited & anor v HMRC [2022] UKUT 301 that the chargeable interest the taxpayer acquired was “the chargeable interest as it stood at the very time of completion”.
- With no evidence to the contrary, the FTT considered that the earliest the taxpayer would have received the keys was at the time of completion.
- The building work was therefore carried out after the time of completion.
- In the FTT’s judgment, the definition in paragraph 7(2)(b) Schedule 6B FA 2003 that a building counts as a dwelling if it is "in the process of being … adapted" meant there needed to be some physical process of adaptation happening at the time of completion.
- Purchasing products and organising a builder did not constitute a physical process of adaptation happening to the annexe.
The appeal was dismissed; MDR was not available to the taxpayer.
Useful guides on this topic
SDLT: Multiple Dwellings Relief (MDR)
What is Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax purposes? When does it apply and how is it claimed? This relief ceased to apply from 1 June 2024.
SDLT: Residential property & dwellings
What is residential property for Stamp Duty Land Tax (SDLT)? What tax rate applies? What garden and grounds are subject to higher rates of SDLT?
SDLT: At a glance, Stamp Duty Land Tax, rates & allowances
What is Stamp Duty Land Tax (SDLT)? What are the rates of Stamp Duty Land Tax (SDLT)?
SDLT: Amending returns & refunds
How do I amend an SDLT return? When can I amend an SDLT return? How do I claim an SDLT refund? How do I deal with contingent consideration?
SDLT: Residential property higher rates
A guide to the Stamp Duty Land Tax (SDLT) higher rate charge on residential property, when it applies and what reliefs are available to exempt buyers from the charge.
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