Bought a House with an Annexe? You Might Be Owed a £15,000 Stamp Duty Refund (MDR Guide 2026)

🏠 The "Look-Back" Loophole (Claiming Before It's Too Late)

Important 2026 Update: The UK Government abolished Multiple Dwellings Relief (MDR) for transactions completing after 1 June 2024. If you are buying a house today, this relief sadly no longer exists.

However, do not stop reading. If you purchased a property with an annexe or "Granny Flat" between 2022 and May 2024, you are sitting in the "4-Year Reclamation Window."

HMRC allows you to claim overpaid Stamp Duty for up to 4 years. If your solicitor missed this relief at the time (which happens frequently), HMRC could still owe you a cheque for £10,000 to £30,000.

Bought a House with an Annexe?

1. Why You Might Be Owed Money

For purchases made before the June 2024 abolition, MDR worked by averaging the property value across the number of dwellings. This avoided the higher progressive tax bands.

🧮 Historic Case Study (2023 Purchase)

You bought a house with an annexe for £900,000 in 2023.

What You Likely Paid (Standard SDLT)

• The tax on £900k was roughly £32,500.

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What You Should Have Paid (With MDR)

• Step 1: Divide £900k by 2 dwellings = £450,000 average.
• Step 2: Tax on £450k was approx £10,000.
• Step 3: Multiply by 2 = £20,000.
• Correct Tax: £20,000

💰 POTENTIAL REFUND: £12,500 + Interest

2. The "Litmus Test" (Did Your Annexe Qualify?)

HMRC is extremely strict on retrospective claims. A spare bedroom with a microwave does not count. To claim the refund, the annexe must have been physically independent on the day of completion.

📋 The Mandatory Checklist

• Separate Entrance: Direct access from the outside, or from a communal hallway (not walking through the main lounge).
• Sleeping Area: A designated space for sleeping.
• Bathroom: A private toilet and washing facilities behind a door.
• Kitchen: The dealbreaker. It must have had a functional kitchen (sink, worktop, power for cooking) installed at the time of purchase.
• Privacy: A lockable door separating it from the main house.

⚠️ Jurisdiction Alert (England & NI Only): Stamp Duty Land Tax (SDLT) applies to England and Northern Ireland.
• Scotland: Has Land and Buildings Transaction Tax (LBTT).
• Wales: Has Land Transaction Tax (LTT).
Rules for relief differ in these regions. This guide covers SDLT only.

3. How to Claim (Safely)

You have 4 years from the purchase date to file for "Overpayment Relief."
Step 1: Evidence. Find the estate agent brochure, floor plans, and photos from when you bought it.
Step 2: Write to HMRC. You can write to the Birmingham Stamp Taxes Office with your calculation and evidence.

⚠️ Warning: The "No Win, No Fee" Sharks

Since the abolition of MDR, aggressive "Tax Reclaim Agents" are cold-calling homeowners. They often take 30-40% of your refund.

Risk: If they submit a dodgy claim (e.g., arguing a utility room is an annexe) and HMRC investigates later, YOU are liable to repay the tax plus penalties. The agent will have disappeared with their fee. Always use a regulated Chartered Accountant or solicitor.

🛡️ Chief Editor’s Verdict

Check your calendar, not just your floor plan.

The door on MDR has slammed shut for new buyers, but the window for 2022, 2023, and early 2024 buyers remains open.
If you bought a multi-dwelling property in that window and paid full SDLT, you likely overpaid. Review your paperwork today before the 4-year clock runs out.

Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice. Tax rules (including the 2024 abolition of MDR) are subject to change. "Overpayment Relief" claims are subject to strict HMRC scrutiny. Always consult with a qualified tax advisor or solicitor before submitting a claim.