Do you have to pay ADS if you co-own a property subject to a liferent?

Introduction

People often ask whether Scottish Additional Dwelling Supplement (ADS) applies when they buy a home but already have some form of ownership in another property. The question becomes more difficult where that other property is occupied by a parent under a liferent, and the buyer only holds the title in a limited way. In that situation, the key issues are whether the buyer held a “major interest” in another dwelling at the time of purchase and, if ADS was paid, whether it is still possible to recover it.

The Question

A married couple bought a home in Scotland in late 2017 and paid ADS as part of their LBTT liability. ADS was charged because one spouse was a co-owner of another dwelling together with a sibling. That other dwelling was occupied by their parent, who held a liferent. The co-owner says they had not lived in that property since becoming an owner and had no practical right to occupy it, although some documents may at times have been sent there while they were living abroad. The question is whether ADS was properly due and, if not, whether a repayment can still be claimed now.

Nick’s Explanation

Nick’s view was that this is an unusual liferent situation and that there may have been an argument that ADS was not due in the first place.

In summary, his reasoning was that if the parent held a liferent and the child’s ownership was only a bare title position, with no real right to live in, use or benefit from the property, there is at least an argument that the buyer may not have held a qualifying major interest in another dwelling for ADS purposes.

However, Nick also identified the more important practical issue: time limits. He explained that while ordinary amendments to an LBTT return are subject to a 12-month amendment window, Revenue Scotland also has a separate framework for correcting an assessment where tax has been overpaid, but that route is still subject to a long-stop limit. On the facts given, more than five years had passed since the 2017 purchase, so any route to recover ADS was likely to be out of time.

That means the technical argument about whether ADS was originally due may no longer help in practice if the statutory time limit for correction or repayment has expired.

The Law

ADS is charged under the Land and Buildings Transaction Tax (Scotland) Act 2013, as amended, where a buyer purchases an additional dwelling and, at the end of the effective date of the transaction, owns more than one dwelling and is not replacing their only or main residence.

The legislation focuses on whether the buyer owns a relevant interest in another dwelling. In broad terms, the rules look for ownership of a “major interest” in a dwelling. In many cases this is straightforward, but liferent arrangements can complicate matters because Scots property law can divide practical enjoyment of a property from the underlying title.

Where someone has only a limited or residual title and another person has the real right to occupy and enjoy the property under a liferent, the question is whether the title holder’s interest is enough to count as ownership of another dwelling for ADS purposes. The answer depends on the legal nature of the interest actually held at the relevant date.

Separately, LBTT has strict procedural time limits. There is a normal period for amending a return, and there are also statutory limits governing claims for repayment or correction of overpaid tax. In practice, these time limits are often decisive. Even if a return was wrong when filed, a taxpayer may lose the right to recover the tax if the relevant statutory period has expired.

Analysis

The analysis has two stages.

First, was ADS due when the home was bought in 2017?

If a buyer already owns another dwelling, ADS will usually apply unless an exception is available. But a liferent can materially affect the position. If the parent had the legal right to occupy and enjoy the property for life, and the child’s interest was only a bare ownership interest with no present right of occupation or enjoyment, there is a respectable argument that the child did not hold the kind of beneficial or substantial dwelling interest that ADS is aimed at.

That does not automatically mean ADS was definitely not due. The exact wording of the title deeds and the nature of the liferent matter. It would usually be necessary to review the disposition, any liferent deed, and the legal character of the retained and transferred interests. A mere correspondence address at the property would not by itself prove residence or ownership for ADS purposes. The important point is the legal interest held, not where post was sent.

Second, can the tax still be recovered now?

This is where the claim is likely to fail. A purchase completed in 2017 is now well outside the normal amendment period. It is also outside the longer period generally available for correcting overpaid LBTT. On the facts provided, more than eight years have passed since the effective date of the transaction. That is beyond the relevant statutory window, so even if the original ADS treatment was arguably wrong, the opportunity to amend the return or obtain a repayment has most likely expired.

So the legal merits and the procedural position point in different directions. There may have been an arguable substantive case on the liferent issue, but the procedural time limit is likely fatal to any repayment claim now.

For completeness, this is not an “uninhabitable” or “not suitable for use” case. But where readers are considering that separate ADS or higher-rates issue, the condition threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Outcome

The practical conclusion is that there may have been an argument in 2017 that ADS should not have been charged if the buyer’s interest in the other property was limited to bare ownership subject to a parent’s liferent. However, because the transaction took place more than five years ago, a repayment or correction claim is now very likely to be out of time. In practical terms, that usually means the ADS cannot now be recovered.

Practical Steps

If someone is in a similar position and their purchase was more recent, they should:

• obtain the title deeds and any liferent documentation for the other property;
• check exactly what legal rights they held on the effective date of the purchase;
• review whether they had any present right to occupy, use or benefit from that dwelling;
• compare the transaction date against the statutory LBTT amendment and repayment deadlines;
• take advice quickly, because time limits are strict and delay can end the claim even where the technical argument is good.

If the purchase was many years ago, the first question should be limitation. There is little value in spending heavily on the substantive merits if the statutory deadline for recovery has already passed.

Conclusion

Co-owning a property subject to a liferent can create a genuine ADS question, because bare title is not always the same as a practical ownership interest in another dwelling. But even where ADS may have been charged in error, LBTT claims are governed by strict time limits. For an acquisition completed in 2017, the repayment window is likely to have closed.

Legal References Used

• Land and Buildings Transaction Tax (Scotland) Act 2013
• Additional Dwelling Supplement provisions within the Land and Buildings Transaction Tax (Scotland) Act 2013, as amended
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

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