These FAQs should be used as a basic introduction to the Supplement.  More detailed information is available in the Legislative Guidance to help taxpayers and their agents understand whether or not their particular transaction is subject to the supplement. 
 
1.01 What is the Additional Dwelling Supplement?

It is a new LBTT supplement on purchases of additional residential properties in Scotland (such as buy-to-let properties and second homes) of £40,000 or more. The Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016 completed the parliamentary process on 8 March 2016 and has been granted Royal Assent, meaning the Additional Dwelling Supplement came into force on 1 April 2016.

1.02 Why has the Scottish Government introduced an Additional Dwelling Supplement? 

The Deputy First Minister stated when setting out the Scottish Government proposals in the 2016-2017 Draft Budget that the Scottish Government wished to ensure, as far as practical, that opportunities for the first time buyers to enter housing market in Scotland were as strong as they possibly could be.

The UK Government introduced a new Stamp Duty Land Tax (SDLT) supplement on the purchase of additional residential properties in the rest of the UK on 1 April 2016.

Absence of a similar supplement in Scotland could make it more attractive to invest in additional residential properties in Scotland compared to the rest of the UK, particularly at the lower end of the market, making it difficult for the first-time buyers in Scotland to buy their first home.

1.03 How much is the Additional Dwelling Supplement and what does it apply to?  

The Additional Dwelling Supplement is 3 per cent of the total purchase price of an additional residential property purchase of £40,000 or more.Where applicable, it will be payable in addition to the LBTT that would be due on the acquisition. Similarly any house already owned must be worth £40,000 or more for the Additional Dwelling Supplement to apply.

An additional house purchased for £39,999 would not attract the Additional Dwelling Supplement but an additional house purchased for £40,000 or more would.

Example

Individual owns a residential property which is their main residence and decides to buy an additional property with a purchase price of £200,000 which individual intends to rent out.  The Additional Dwelling Supplement would be £200,000 x 3% = £6,000.

1.04 When did the Additional Dwelling Supplement take effect?

The supplement commenced on 1 April 2016. However, the Additional Dwelling Supplement does not apply to purchases with an effective date after 1 April 2016 if the contract was entered into before 28 January 2016 (the date that the Bill was published).

 1.05 Are there any exemptions or reliefs from the Additional Dwelling Supplement?

The existing exemptions which apply to LBTT transactions also apply to transactions involving the purchase of additional dwellings. Consequently, where a transaction is exempt from LBTT, it will not be subject to the ADS.  Only one new relief is introduced by the LBTT(A)(S)A 2016.  Full relief is available for any transaction to which section 59(8) LBTT(S)A 2013 applies (i.e. it covers 6 or more dwellings, whether in a single transaction or linked transactions in Scotland).

1.06 Has Revenue Scotland's guidance material been updated to reflect the introduction of the Additional Dwelling Supplement?

Revenue Scotland has published Legislative Guidance and updated its ‘How To’ Guidance to assist those involved in making a return where the supplement applies.  The Guidance has been developed with input from external users.  In addition, the Tax Calculator has also been updated.

1.07 Can I claim a repayment of ADS that I have paid?

Yes, in certain circumstances. Please see LBTT10070 - 'Amendments to returns/ repayment claims' for full details.

1.08 How do I claim a repayment of ADS?

If a return was submitted using the paper return or;

the claim is being submitted after the 12 month period or;

you no longer have access to the original online return, please follow the guidance on how to complete an ADS Repayment Claim Form.

If the return was submitted online and is within the 12 month amendment period, please follow the guidance on how to amend and online LBTT return to claim repayment of ADS.

1.09 How will the draft LBTT (Additional Amount-Second Homes Main Residence Relief) (Scotland) Order 2017 amend the deeming provisions including repayments?

The draft LBTT (Additional Amount-Second Homes Main Residence Relief) (Scotland) Order 2017 will amend the ADS rules for joint purchases by spouses, cohabitants and civil partners. The order will only come into effect after a period of parliamentary scrutiny. We expect this to be around 30 June 2017. We will update the Revenue Scotland legislative guidance when the order comes into force. Revenue Scotland's technical update provides further details.

 

Last updated: 
31 May 2017

Archive

Updated date: 2017-05-22 10:48
Version ID: 1686
Updated date: 2017-05-19 16:35
Version ID: 1684
Updated date: 2017-05-19 16:33
Version ID: 1683
Updated date: 2017-05-19 16:26
Version ID: 1682
Updated date: 2016-06-24 17:51
Version ID: 1196
Updated date: 2016-03-04 10:49
Version ID: 1192
Updated date: 2016-02-19 15:16
Version ID: 1188
CAPTCHA
Security check. Please answer this simple maths problem. E.g. for 1+3, enter 4
9 + 9 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.