As explained in part LBTT10016 of the guidance, where an individual (or group of individuals) purchase their first, or only, dwelling, the ADS will not apply. The "two dwelling rule" does not, however, apply to purchases of dwellings by a non-natural person, such as a company, investment trust or any other corporate entity, or to purchases made by an individual, acting either as a sole trader or in a partnership of which that individual is a partner, the sole or main activity of which is investing or dealing in property.

Special rules apply, however, in relation to transactions by trustees of certain types of trust. Further details relating to trusts can be found in part LBTT10063 of the guidance.

The ADS will therefore apply to every purchase of a dwelling in Scotland by a non-natural person other than certain trust transactions as noted above. The ADS will also apply to all purchases by an individual, acting either as a sole trader or in a partnership of which that individual is a partner, in the course of a business the sole or main activity of which is investing or dealing in property.

This provision is primarily intended to counter a potential tax avoidance opportunity whereby an individual could purchase an additional dwelling via a company or business in order to avoid the ADS.

Full relief is available from the ADS, however, for any transaction in which a buyer (or group of buyers) purchases six or more residential properties in one transaction. Further details on the ADS reliefs available can be found in part LBTT10040 of the guidance.

LBTT(A)(S)A 2016 schedule 2A paragraphs 3 and 9

Example 19: First purchase of dwelling by a company

Example 20: First purchase of a dwelling by property investment sole trade

Archive Date: 
6 April 2016
Last updated: 
6 April 2016

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