Buying Multiple Flats or Homes in Scotland? Understand MDR First

2 weeks ago

3 2 minutes read

If you’re purchasing multiple properties simultaneously in Scotland, you might be eligible for a beneficial tax relief known as Multiple Dwellings Relief (MDR). The relief is applied to Land and Buildings Transaction Tax (LBTT), the Scottish equivalent of Stamp Duty in England and Wales.

You can save hundreds, even thousands, on your tax bill with knowledge of MDR—but only if you’re eligible and claim it. We’ve written this comprehensive guide especially for developers, landlords, and investors.

What is Multiple Dwellings Relief (MDR)?

MDR allows buyers of multiple properties to calculate LBTT based on the average price per home rather than the total purchase price. This will result in a lower LBTT charge, especially if one or more of the properties are low-value.

For instance, if you’re buying four flats in a single transaction for £800,000, LBTT will be calculated based on the average value (£200,000) of each property—often placing each into a lower LBTT bracket.

Who Can Claim MDR in Scotland?

Any individual or company buying two or more dwellings in a single deal can claim MDR. This includes:

Property investors buying portfolios
Developers acquiring a block of flats
Families purchasing homes together
Landlords expanding their portfolio of rentals

It must be that every property is an individual dwelling with its own entrance, kitchen, and bathroom amenities. Claims may also be made if you buy a number of properties from the same seller within a short timeframe on linked transactions.

How MDR Affects LBTT Liability

The relief reduces LBTT liability substantially. However, it does not eliminate it altogether. An LBTT minimum continues to exist, and any Additional Dwelling Supplement (ADS) – a 6% supplement – might remain payable on investment properties or second homes.

Accurate execution is paramount. Doing MDR wrongly or omitting ADS can lead to underpayment and fines.

Filing an MDR Claim

To be eligible for MDR, you will need to make the application as part of the first LBTT return process. Revenue Scotland requires:

Split of properties
Evidence each is a separate dwelling
Proper use of the online return process

You will not be able to claim MDR retrospectively after submitting unless within the 12 months to alter your return. Getting it right initially, therefore, is paramount.

How UK Property Accountants Helps MDR Claims

Working out MDR can be complex, especially if it’s your first time buying more than one property. UK Property Accountants are experienced in guiding clients through putting purchases together right and making tax-compliant MDR claims.

They don’t just calculate your LBTT under relief principles, but also help put purchases together tax-efficiently—specifically useful to developers and high-volume investors.

Conclusion

Multiple Dwellings Relief Scotland is an excellent way to reduce your LBTT bill—but only if done properly. Give yourself time to read the rules, fill out forms, and seek expert help if you are unsure.

By putting compliance first, you could save a thousand pounds or more on your next property sale.