An Update on the Additional Dwelling Supplement

There's good news for home owners trying to reclaim Additional Dwelling Supplement - the steep extra tax paid on purchases if your current property has not yet sold.

We told how Revenue Scotland would only consider refunds of ADS if you disposed of your previous main residence within 18 months.

Despite the COVID-19 lockdown there were no plans to extend the time frame leaving thousands in limbo.

Now new emergency powers by the Scottish Government recommend an extension to the 18 month period – allowing worried owners to finally breathe a sigh of relief.

In a statement to the Scottish Parliament last week Constitution Secretary Mike Russell urged MSPs to back a second Coronavirus Bill, which included the tax break.

He said: “Reflecting the realities of our housing market, for those who had paid the Land and Buildings Transaction Tax (LBTT) Additional Dwelling Supplement prior to a particular date, the Bill will extend the time period during which a previous main residence must be sold in order for them to claim a repayment from Revenue Scotland.”

The proposed length of the extension has not yet been revealed, but Revenue Scotland said it would continue to engage with Scottish Government officials “to ensure we are positioned to communicate to agents and taxpayers any forthcoming policy changes relating to devolved taxes.”

The first Coronavirus (Scotland) Bill became law in six days. So it's hoped for a speedy resolution to the ADS issue.

*ADS is a supplement on purchases of additional residential properties in Scotland, such as buy-to-let and second homes costing £40,000 or more.

Crucially it kicks in if you haven't yet sold your existing main residence, but can usually be reclaimed within 18 months if you do sell.

It's charged at four per cent of the property's purchase price and is in addition to Land and Buildings Transaction Tax (LBTT).

On a £300,000 property, for example, the LBTT is £4600 and there's a £12,000 ADS bringing the total tax payable to £16,600.

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