Can you avoid ADS on a new home in Scotland by committing to sell your old property before completion?

Introduction

Buyers returning to Scotland often ask whether they can avoid the Additional Dwelling Supplement (ADS) if they already own another residential property that is being sold. The usual concern is practical: a new home purchase is ready to complete, but the existing property has not yet settled. The question is whether agreeing the sale, accepting an offer, or concluding missives is enough to stop ADS applying.

In most cases, the answer turns on one point: whether the buyer still owns another dwelling on the effective date of the new purchase. For LBTT and ADS purposes, intention to sell is not enough on its own.

The Question

A married couple living abroad plan to return to Scotland and buy a new family home. They already own another Scottish property which has been let out for several years and is now being marketed for sale. They want to keep the LBTT bill at the lower ordinary residential rate and avoid the much higher total that would arise if ADS is charged.

The issue is whether there is any way to commit to selling the existing property before buying the new home, so that ADS does not have to be paid at completion of the new purchase.

Nick’s Explanation

Nick’s key point is that ADS depends on legal ownership at the time the new purchase completes. In anonymised form, his explanation was:

“ADS is charged when, on the effective date of the transaction, the buyer still has a major interest in another dwelling. If the old property has not yet been sold and title has not passed, ADS will apply. Agreeing a sale in principle is not enough.”

He also explained that there are usually only two ways to avoid paying ADS upfront:

• make sure the old property sale completes on the same day as, or before, the purchase of the new home; or
• delay the purchase of the new home until the old property sale has legally settled.

If neither can be achieved, the buyer will usually have to pay ADS first and then consider whether a reclaim is available after the former property is sold within the permitted time limit.

The Law

LBTT is charged under the Land and Buildings Transaction Tax (Scotland) Act 2013 on the acquisition of a chargeable interest in land.

• Section 3 imposes the charge to LBTT.
• Section 4 explains what counts as a “chargeable interest”.
• Section 60 defines a “major interest” in land, which includes ownership of land and certain leasehold interests.

ADS is an additional amount of LBTT charged on certain purchases of dwellings where, at the effective date of the transaction, the buyer owns more than one dwelling and the statutory conditions are met. In broad terms, the effective date is usually the completion date.

For a buyer replacing a main residence, the legislation can allow relief from ADS or a later repayment, but the timing rules are strict. What matters is not simply an intention to replace the old home, but whether the previous dwelling has actually been disposed of in the way the legislation requires.

In practice, a property is not treated as disposed of merely because it is on the market, an offer has been accepted, missives have been concluded, or a deposit has been paid. The critical point is legal completion of the sale.

Analysis

Step 1: identify whether the buyer owns another dwelling.

If the couple still own the existing rental property when they complete the purchase of the new home, they still hold a major interest in another dwelling. That is the starting point for ADS.

Step 2: ask whether the new purchase is replacing a main residence in time.

Where a buyer is replacing a main residence, ADS may not apply, or it may be reclaimable later, depending on the order of transactions and whether the former main residence is sold within the permitted period. But if the old property has not yet been sold by the completion date of the new purchase, ADS will generally still be payable upfront.

Step 3: consider whether “committing” to the sale is enough.

Usually it is not. A private agreement to sell, an accepted offer, or even concluded missives will not normally stop ADS applying if the seller still owns the property at completion of the new purchase. The legislation looks to actual legal ownership on the effective date.

Step 4: consider the practical ways to avoid the upfront charge.

The cleanest route is to ensure that the existing property sale settles before, or on the same day as, the new purchase. If that cannot be arranged, the buyer usually cannot avoid the upfront ADS charge simply by showing that the old property is being actively sold.

Step 5: if ADS is paid, consider repayment.

If the new home becomes the buyer’s only or replacement main residence and the previous residence is sold within the statutory repayment window, a reclaim may be available. The buyer must still fund the ADS at completion and then make the repayment claim afterwards.

Step 6: check for ownership complications.

If the old property is held through a company, trust, partnership, or more complex joint ownership arrangement, the analysis can change. The definition of who holds a major interest can become more technical, and the standard replacement-of-main-residence analysis may not apply in the same way.

This is not an uninhabitable-property case, but where buyers look at whether a property is not suitable for use as a dwelling, it is important to note that the condition thresholds are now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Outcome

If the couple still legally own their existing property on the day they complete the purchase of the new home, ADS will usually apply. Simply putting the old property on the market, accepting an offer, or entering into a binding sale contract will not normally be enough to avoid the charge.

So, in practical terms, there are only two realistic ways to avoid paying the higher amount upfront:

• complete the sale of the old property before the new purchase completes; or
• complete both transactions on the same day, with the sale settling first if possible.

If that cannot be done, the likely position is that ADS must be paid first, with a possible reclaim later if the statutory conditions for replacement of a main residence are met.

Practical Steps

• Ask your conveyancer to confirm the exact completion dates proposed for both transactions.
• See whether the sale of the existing property can be accelerated so that it settles before, or on the same day as, the purchase.
• Check whether the existing property is the dwelling that counts as your previous main residence for ADS replacement purposes.
• Budget for the possibility that ADS will need to be paid upfront if the timings do not align.
• If ADS is paid, diarise the deadline for any repayment claim and keep full evidence of the sale and purchase dates.
• If ownership is through anything other than straightforward personal ownership, obtain specific advice on the structure before completion.

Conclusion

For Scottish LBTT purposes, ADS is determined by what you legally own on the effective date of the new purchase. A planned or agreed sale of the old property is not enough by itself. To avoid ADS upfront, the old property usually needs to be sold before, or at the same time as, the new home purchase. Otherwise, the normal route is to pay ADS first and then seek a refund if the replacement residence rules are later satisfied.

Legal References Used

• Land and Buildings Transaction Tax (Scotland) Act 2013, section 3
• Land and Buildings Transaction Tax (Scotland) Act 2013, section 4
• Land and Buildings Transaction Tax (Scotland) Act 2013, section 60
• Additional Dwelling Supplement provisions within the Land and Buildings Transaction Tax (Scotland) Act 2013
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799

This page was last updated on 22 March 2026.

See all questions and answers categorized in this sitemap. Or use Google site search below.