Do you pay ADS in Scotland if you still own a former home in England that is now let out?

Introduction

People often ask whether Scotland’s Additional Dwelling Supplement (ADS) can be avoided when they want to buy a new home in Scotland but still own an older property elsewhere in the UK. A common situation is where the older property used to be the buyer’s main home but is now rented out, while the buyer has moved to Scotland and wants to buy a home to live in.

The key question is usually whether the old property still counts for ADS purposes, and whether the fact that the new Scottish purchase will be the buyer’s only lived-in home makes any difference.

The Question

A buyer owns a residential property in England. It used to be their main residence, but it has since been let to tenants. The buyer is now living with family in Scotland and wants to buy a home there to use as their own main residence. They want to know whether ADS would still apply, given that the English property is no longer the home they live in. They also know that ADS may be reclaimable if the former main residence is later sold, but the immediate cost of paying the supplement upfront would make the purchase difficult.

Nick’s Explanation

Nick’s core point was that, under the current Scottish rules, ADS usually applies if a buyer acquires a dwelling in Scotland for £40,000 or more and still owns another dwelling at the effective date of the transaction.

In anonymised form, his explanation was:

“It does not usually matter that the other property is no longer your main residence. If you still own it when you complete the Scottish purchase, it is generally still counted as an additional dwelling for ADS purposes.”

He also noted that a repayment may be available if the buyer is replacing their only or main residence and disposes of the former main residence within the permitted time limit after buying the new one. However, that does not remove the need to fund the ADS upfront on completion if the conditions for the charge are met at that time.

Nick also suggested that some people consider restructuring ownership of the existing property before buying. That kind of step requires very careful tax analysis because transferring a dwelling can itself trigger tax charges and other consequences.

The Law

ADS is charged under the Land and Buildings Transaction Tax (Scotland) Act 2013, as amended. It is an additional amount of LBTT charged on certain purchases of dwellings in Scotland.

In broad terms, ADS applies where, at the end of the day of the purchase:

• the buyer acquires a major interest in a dwelling in Scotland for £40,000 or more; and
• the buyer owns another dwelling worth £40,000 or more; and
• the buyer is not replacing their only or main residence in a way that falls within the statutory exception.

The replacement of only or main residence rules are central. Broadly, a buyer may avoid ADS at the outset if, on the purchase of the new home, they are replacing their only or main residence and have already disposed of their previous only or main residence within the relevant period. If they buy first and sell later, ADS may still be payable upfront but can potentially be reclaimed if the previous only or main residence is sold within 36 months after the purchase of the new home.

The rules look closely at whether the dwelling being sold or retained was genuinely the buyer’s only or main residence. That is a factual question.

Analysis

Step 1: Is the Scottish purchase a dwelling transaction within ADS?

If the buyer is purchasing a residential property in Scotland for £40,000 or more, the transaction is within the scope of the ADS rules.

Step 2: Does the buyer still own another dwelling at completion?

Yes, in this scenario the buyer still owns the English property. The fact that it is in England rather than Scotland does not take it out of account. ADS looks at other dwellings owned anywhere in the world.

Step 3: Does it matter that the English property is now let out?

Usually no. A property does not stop being a dwelling for ADS purposes simply because it is rented to tenants. If the buyer still owns it, it will usually count as another dwelling.

Step 4: Does it matter that the new Scottish property will be the buyer’s main residence?

Not by itself. The fact that the new purchase will become the buyer’s only or main residence does not automatically disapply ADS. The important question is whether the buyer is replacing a previous only or main residence within the statutory rules.

Step 5: Is the buyer replacing their only or main residence at the time of purchase?

That depends on whether the English property is still the relevant former only or main residence and whether it has been disposed of in time. In this scenario, the buyer still owns that former home and has not sold it before buying the Scottish property. That usually means the replacement exception will not remove ADS at the outset.

Step 6: Can the buyer reclaim ADS later?

Potentially yes. If the English property was the buyer’s previous only or main residence, and it is sold within 36 months after the purchase of the new Scottish home, a repayment claim may be available. But this is a recovery mechanism after payment, not a way to avoid paying ADS on completion.

Step 7: What about moving out and living with family in the meantime?

Living with family does not itself create ownership of a replacement dwelling, and it does not mean the buyer has already replaced their only or main residence for ADS purposes. The issue remains that they still own the earlier dwelling when buying the new one.

Step 8: Could the buyer transfer the English property to a company first?

This is not a simple fix. A transfer to a company is a separate taxable transaction and can trigger SDLT in England, usually by reference to market value in many connected-party situations. It may also have capital gains and financing consequences depending on the facts. In many cases, incorporation or transfer to a company is not tax-neutral and should not be assumed to solve the ADS problem cheaply or safely.

If any argument is being considered that a property is not a “dwelling” because it is uninhabitable or not suitable for use as a dwelling, the legal threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Ordinary disrepair, dated condition, or the need for renovation will often not be enough.

Outcome

In this scenario, ADS would usually apply to the Scottish purchase if the buyer still owns the former home in England on the completion date.

The fact that the English property is now rented out, and the fact that the Scottish property will become the buyer’s main residence, do not normally prevent ADS from being charged upfront.

If the English property was the buyer’s previous only or main residence, ADS may be reclaimable later if that property is sold within 36 months of buying the Scottish home and the other statutory conditions are met.

Practical Steps

A buyer in this position should usually do the following:

• confirm whether they will still own the former property on the completion date of the Scottish purchase;
• check whether the former property was genuinely their only or main residence before they moved out;
• work out the ADS payable upfront so they understand the funding position;
• consider whether a sale of the former property before completion is possible if avoiding ADS upfront is essential;
• if planning to sell later, keep evidence showing that the former property was the previous only or main residence in case a repayment claim is needed;
• take specific advice before transferring the existing property to a company, trust, or anyone else, because that can create separate tax charges and legal issues.

Conclusion

If you buy a home in Scotland while still owning a former home in England that is now let out, ADS will usually still be due. The main residence point matters for possible replacement relief and repayment, but it does not usually stop the charge arising upfront if the old property is still owned at completion.

Legal References Used

• Land and Buildings Transaction Tax (Scotland) Act 2013
• Additional Dwelling Supplement provisions within the Land and Buildings Transaction Tax regime
• 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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