This worked example applies the LBTT rates and bands for residential transactions with an effective date prior to 15 July 2020 or after 31 March 2021 and the amount of tax shown is for illustrative purposes only.

Example 37:

OM Developments, a sole trader property investment business, purchases 5 dwellings in one transaction for £1m. The ADS will apply to the purchase but OM Developments can claim Multiple Dwellings Relief. The LBTT due in relation to a dwelling is calculated using the average consideration, £200,000. Applying residential rates means tax payable is £1,100.

As no relief is available, the calculation of DT takes account of the ADS, meaning 4% of £200,000, or £8,000 must be added to DT for each dwelling, meaning DT is £9,100. Applying the formula ∑DT gives £45,500.

This is the LBTT payable unless this is less than the minimum prescribed amount. The minimum prescribed amount is 25% of the LBTT that would be payable absent of the relief. Applying residential rates to the considration of £1 million gives £78,350. Adding the 4% ADS (i.e. £40,000) to this gives £118,350. 25% of this is £29,587 and therefore the LBTT payable is £45,500. 

Last updated: 
4 September 2020


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