Tax relief statistics - Multiple Dwellings Relief (MDR) update
Updated 7 December 2023
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The 2021 publication of Tax relief statistics included a note that the statistics for Multiple Dwellings Relief (MDR) had been withdrawn and the methodology was being reviewed. This review identified 2 errors which have been corrected. We now provide revised estimates for the financial year 2019 to 2020 and the 3 preceding years, and new estimates for the financial years 2020 to 2021 and 2021 to 2022.
Due to a change in the data source in the financial year 2016 to 2017, we have only revised the statistics relating to the financial year 2016 to 2017 to present. We cannot correct the previously published estimates for the years before 2016 to 2017, which are withdrawn.
We have found 2 errors. Previous estimates only took account of 15% of claims because of the incorrect usage of a filtering variable in the administrative data set. Correcting this has increased the average annual MDR total from about £50 million to £245 million (taking the 4 years up to financial year 2019 to 2020). We have also found we have underestimated the true MDR value for claims relating to ‘linked transactions’ (where more than one transaction is part of a single arrangement between the same buyer and vendor).
We have included a statistical adjustment to correct this underestimation, though this introduces some uncertainty as the adjustment is based on a subset of administrative data. This increases the average by a further £175 million, to a total of £425 million overall. (Figures have been rounded to the nearest £5 million.)
We are unable to quantify the uncertainty introduced by the statistical adjustment. However, to give an indication of the sensitivity of the estimates to this adjustment, we can say that if our adjustment were 10% higher than it currently is, our new average for those 4 years would increase by about £30 million (and if the adjustment were 10% lower then the average would decrease by £30 million).
Table 1: Previously published and revised cost estimates for Multiple Dwellings Relief (MDR) (values in £ million, rounded to the nearest £5 million)
| Metric | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 |
|---|---|---|---|---|---|---|
| Last published (in Tax relief statistics October 2020) | 60 | 60 | 35 | 45 | - | - |
| New methodology | 375 | 455 | 390 | 470 | 665 | 730 |
| Change between 2020 figures and new methodology | 315 | 395 | 355 | 425 | - | - |
Table 2: Original methodology vs revised methodology claimant volumes for Multiple Dwellings Relief (MDR) (rounded to the nearest hundred)
| Metric | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 |
|---|---|---|---|---|---|---|
| Original methodology | 6,400 | 5,700 | 1,300 | 1,300 | 1,200 | 1,600 |
| New methodology | 6,900 | 6,700 | 9,300 | 9,700 | 10,700 | 15,500 |
| Change between old and new methodology | 500 | 1,000 | 8,000 | 8,400 | 9,500 | 13,900 |