The Land and Buildings Transaction Tax (Amendment) (Scotland) Act 2016 (LBTT(A)(S)A 2016) was granted Royal Assent on 24 March 2016. Introduced on 1 April 2016, an additional amount of Land and Buildings Transaction Tax (LBTT), known as the Additional Dwelling Supplement ("the ADS"), is due on the purchase of additional dwellings in Scotland, such as buy-to-let properties and second homes.

The LBTT(A)(S) 2016 amends the Land and Buildings Transaction Tax (Scotland) Act 2013 (LBTT(S)A 2013). Part 1 of the LBTT(A)(S)A 2016 introduces a new schedule 2A into the LBTT(S)A 2013 and the key provisions of the LBTT(A)(S)A 2016 are included in this new schedule.

The ADS applies to most purchases of additional dwellings by individuals in Scotland where, at the end of the day that is the effective date of the transaction, a buyer owns two or more dwellings and is not replacing their main residence. It also applies to most purchases of dwellings by non-natural persons (e.g. companies, partnerships) in Scotland.

The Land and Buildings Transaction Tax (Additional Amount – Second Homes Main Residence Relief) (Scotland) Order 2017 (SSI Order 2017) – made retrospective by the Land and Buildings Transaction Tax (Relief from Additional Amount) (Scotland) Act 2018 amended the ADS rules around family units and replacing main residences including the rules on claiming repayments, in Schedule 2A of the Land and Buildings Transaction Tax (Scotland) Act 2013, by introducing two further paragraphs, 8A and 9A (see LBTT 10062A).

Please note: The ADS rate was changed to 4% with effect from 25 January 2019. The contract date and the effective date of your transaction will determine whether the changes affect you.  

ADS rates for transactions on or after 25 January 2019

ADS is 4% of the ‘relevant consideration’ (usually the purchase price).

ADS rates for transactions prior to 25 January 2019

ADS is 3% of the ‘relevant consideration’ (usually the purchase price).

Transitional Provision

Where the effective date of a land transaction is on or after 25 January 2019 and the contract for the land transaction was entered into prior to 12 December 2018, the tax rate of 3% for ADS that was in force prior to 25 January 2019 will apply.

Further information can be found at LBTT10080.