What is a subsidiary dwelling for the purposes of the 3% SDLT surcharge?


“My client is purchasing a property with an annex attached and will be using the annex as a holiday let. The main part of the house will be their main residence. Will our client have to pay the surcharge on the annex? I wasn’t sure whether this change has now come into effect.

Does the higher rate of the tax have to be paid on both the main house and the annex, could we could claim multiple dwelling relief?

Source: BLG Member


The 3% SDLT surcharge will not be payable on either provided that the annex is ‘subsidiary’ to the main part of the house and is purchased in the same transaction and the main house is replacing the clients’ only or main residence.  If the annex is not subsidiary to the main house the surcharge will be payable on both even if the main house is replacing an only or main residence. Multiple dwellings relief can be claimed in both cases.

To be ‘subsidiary’ to another dwelling (the ‘main dwelling’):

(1)  the annex must be situated within the grounds of or within the same building as the main dwelling; and

(2)  the amount of the total chargeable consideration for the transaction which is attributable, on a ‘just and reasonable’ basis, to the main dwelling must be at least two-thirds of the chargeable consideration attributable (in this case) to the main dwelling and the annex.

The changes to the legislation in relation to subsidiary dwellings have effect from 1 April 2016.

At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.

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