A mixed-use building is generally a building composed of a retail unit on the ground floor and flats above it. They have two alternative tax benefits. Stamp Duty is usually payable at the (up to 10% lower) non-residential tax rates on the price. Or it is possible to claim a Stamp Duty relief on the proportion of the price attributable to the flats.
In early November 2020, HM Revenue & Customs (HMRC) updated their internal guidance manual (which is available online) to confirm that when claiming the relief on purchases of mixed-use buildings, the tax should be calculated without using the 3% surcharge, even for purchases made by companies. This means that the effective tax rate might be lower than 3% and those that claimed the relief within the last four years (having paid tax including the 3% surcharge) are due a refund.
HMRC’s position is the correct interpretation of the rules, but until early November 2020, we were unsure whether HMRC would adopt a different interpretation. We now know that they will not. This should be good news to buyers of mixed-use buildings, irrespective of the scale of the residential element. A significant tax saving may be due, e.g., on a single mixed-use building containing four flats, as well as on a purpose-built private-rented sector development containing 2,000 flats.