Paying the ADS and making an LBTT return for a transaction within the scope of the LBTT(A)(S)A 2016 follows the same process as making a LBTT return. Only one LBTT return and payment will be required for a transaction. The structure of the LBTT return has been changed with effect from 1 April 2016 to capture information about the ADS where it is payable.

Part LBTT4002 of the guidance contains details of all rules regarding notifiable transactions and payment of tax.

Separate guidance is also available covering:

Making an LBTT return where a previous main residence has not yet been sold

A buyer in a transaction must make an LBTT return to us for a notifiable transaction within 30 days of the effective date of that transaction and calculate and pay any LBTT due at the same time. The date the LBTT return is required to be made by is the filing date.

Further details relating to the requirement to make an LBTT return, notifiable transactions, the effective date of a transaction and the filing date for that transaction can be found in parts LBTT4005, LBTT4003, LBTT1004 and LBTT1000 respectively of the guidance.

In terms of section 43 of the LBTT(S)A 2013, the Keeper of the Registers of Scotland (the Keeper) may not accept an application for registration, in any of the registers, of a document effecting or evidencing a notifiable transaction unless an LBTT return has been made to us and any LBTT due has been paid.

In a standard residential purchase transaction, this means that the Disposition cannot be registered unless the LBTT position is in order.

In practice, an LBTT return is generally made for a residential purchase transaction shortly after the effective date for that transaction and the application to register the Disposition is then immediately submitted to the Keeper for registration.

Sale of previous main residence settles after the effective date

There may be instances, however, where, in a "sale of previous main residence / purchase of next main residence" situation, there is a delay in the sale of the previous main residence, meaning that the previous main residence has not been sold by the end of the day that is the effective date of the next main residence purchase transaction.

That buyer will find that, as at the end of the day that is the effective date of the next main residence purchase transaction, they are the owner of two dwellings. In such an instance, the ADS will apply to the next main residence purchase transaction.

The effect of paragraph 8 to schedule 2A to the LBTT(A)(S)A 2016, however, is that, where a previous main residence is sold within an 18 month period beginning with the day after the effective date of a next main residence purchase transaction, then that next main residence purchase transaction is treated as having been exempt from the ADS.

Where an LBTT return has already been made for the next main residence purchase transaction prior to the subsequent sale of a previous main residence and the ADS paid, the ADS may be reclaimed provided the previous main residence was sold within an 18 month period beginning with the day after the effective date of the next main residence purchase transaction. Further details on claiming repayment of the ADS can be found in part LBTT10070 of the guidance.

Sale of previous main residence settles after the effective date but before an LBTT return has been made

In practice, LBTT returns are made for residential property transactions shortly after the effective date for that transaction, generally within a few days, in order to timeously register the document for that notifiable transaction.

Where the sale of the previous main residence settles before an LBTT return has been made for the next main residence purchase transaction, the ADS does not require to be paid and the return may be made on the basis that ADS is not due on the transaction.

Where the sale of a previous main residence is significantly delayed, has broken down irrevocably or is not yet underway, the ADS will apply to the next main residence purchase transaction and an LBTT return should be made within 30 days of the effective date of that transaction. The buyer may then be eligible to claim a repayment of the additional LBTT paid for that next main residence purchase transaction if the previous main residence is then sold within an 18 month period beginning with the day after the day that is the effective date of that next main residence purchase transaction. Further details on claiming repayment of the ADS can be found in part LBTT10070 of the guidance.

LBTT(S)(A) 2013 sections 29 and 43

LBTT(A)(S)A 2016 schedule 2A paragraphs 2 and 8

Example 40: Next main residence purchase transaction delayed by a few days

Example 41: Next main residence purchase transaction significantly delayed/cancelled