# Multiple Dwellings Relief (no ADS payable)

Worked example for LBTT3015 Multiple Dwellings Relief.

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.

Company A acquires 8 flats with 2 ground floor shop units for £1,250,000. The chargeable consideration attributable to the shops is apportioned on a just and reasonable basis to be £250,000.

As this transaction involves the acquisition of six or more dwellings, relief for purchases of six or more dwellings (see LBTT10040) will be available therefore Additional Dwelling Supplement (ADS) **will not** be included in any part of this calculation if the relief is claimed.

The amount of tax due in relation to the transaction is:

(DT x ND) + RT

where:

DT is the tax due in relation to a dwelling

ND is the number of dwellings

RT is the tax due in relation to remaining property

**Calculation of DT**

Tax due in relation to a dwelling:

**Step 1 – Find the total consideration attributable to dwellings**.

This is £1,000,000.

**Step 2 – Divide the total consideration attributable to dwellings by the number of dwellings.**

£1,000,000 / 8 = £125,000

**Step 3 – Calculate the amount of tax due in relation to a dwelling using the chargeable consideration from step 2, using tax rates and bands for residential transactions.**

Residential dwellings under £145,000 incur no tax.

So (DT x ND) in this case is zero.

**Calculation of RT**

**Step 1 – Calculate the amount of tax that would be due in respect of the transaction in the absence of the relief.**

The 8 flats and 2 shops are chargeable at non-residential rates.

The total tax chargeable for the transaction, based on a chargeable consideration of £1,250,000 calculated at non-residential rates, is therefore £51,000.

**Step 2 – Divide the consideration attributable to remaining property by the chargeable consideration for the transaction.**

i.e. 250,000 / 1,250,000 = a fraction of 1/5^{th}.^{ }

**Step 3 – Multiply the amount calculated in step 1 by the fraction reached in step 2.**

i.e. £51,000 x 1/5th = £10,200 i.e. the tax due in relation to remaining property (RT).

**Applying the minimum prescribed amount of tax to the part of the transaction relating to dwellings**

Where DT x ND is less than the minimum prescribed amount, the amount of tax chargeable in relation to the relevant transaction is:

MPA + RT

where:

MPA is the minimum prescribed amount, and

RT is the tax due in relation to remaining property.

**Calculating the minimum prescribed amount**

The minimum prescribed amount (MPA) is 25% of:

TT – RT

where:

TT is the amount of tax that would be due in respect of the transaction but for the relief; and

RT is the tax due in relation to remaining property

As determined in Step 1 of ‘Calculation of RT’, the amount of tax that would be due in respect of the transaction but for the relief is £51,000. TT is therefore £51,000.

As determined in Step 3 of ‘Calculation of RT’, the amount of tax due in relation to remaining property, RT, is £10,200.

The minimum prescribed amount (MPA) is therefore 25% of (51,000 - £10,200) = £10,200

Because DT x ND (£0) is less than MPA, the amount of tax that is chargeable in relation to the transaction (after the application of multiple dwellings relief) is:

**MPA (£10,200) + RT (£10,200) = £20,400**

The minimum prescribed amount of 25% is provided for in The Land and Buildings Transaction Tax (Prescribed Proportions) (Scotland) Order 2014.