Can you avoid Scottish ADS by buying in one spouse’s sole name if the other spouse owns an overseas rental property?

Introduction

People returning to Scotland from abroad often ask whether they can avoid the Additional Dwelling Supplement (ADS) by buying a home in just one spouse’s name. The issue usually arises where one spouse owns another dwelling overseas, such as a rented flat or apartment.

For Land and Buildings Transaction Tax (LBTT) purposes, the answer depends on the rules in Schedule 2A to the Land and Buildings Transaction Tax (Scotland) Act 2013. In many cases, buying in one name only does not avoid ADS, because spouses are treated as owning each other’s dwellings for these purposes.

The Question

A married couple live overseas and plan to return to Scotland to retire. They want to buy a home in Scotland. One spouse does not own any property, but the other spouse owns an overseas apartment which is let to tenants and is being marketed for sale.

They want to know whether the Scottish purchase can be made in the sole name of the spouse who owns no property, with the other spouse being added later after the overseas apartment is sold, so that ADS can be avoided.

Nick’s Explanation

Nick’s core point was that ADS looks at property ownership on the effective date of the Scottish purchase, usually completion. He explained that if a spouse owns another dwelling anywhere in the world at that point, that dwelling can still count against the buyer.

In anonymised form, his reasoning was:

“ADS applies when, on the effective date of the transaction, the buyer owns more than one dwelling worldwide. A property owned by a spouse is treated as owned by the buyer, even if the Scottish purchase is made in the buyer’s sole name.”

He also explained that the later repayment route would not help where the overseas property is a let property rather than the couple’s previous main residence:

“The refund rules for ADS depend on disposal of a previous main residence. If the overseas property is let and has not been the buyer’s or spouse’s only or main residence in the relevant period, a later sale will not normally produce an ADS repayment.”

His practical conclusion was that buying in one spouse’s sole name would not avoid ADS if the other spouse still owned the overseas apartment at completion.

The Law

The relevant rules are in Schedule 2A to the Land and Buildings Transaction Tax (Scotland) Act 2013.

In broad terms:

• ADS applies to a purchase of a dwelling if, at the end of the effective date, the buyer owns more than one dwelling and the purchased dwelling is not replacing the buyer’s only or main residence: Schedule 2A, paragraph 2.
• Ownership is considered on a worldwide basis, not just property in Scotland or the UK: Schedule 2A, paragraph 11(2).
• A spouse or civil partner’s dwelling is treated as owned by the buyer for ADS purposes: Schedule 2A, paragraph 6(1)(a).
• A repayment may be available if ADS was paid on the new purchase and the buyer later disposes of a previous only or main residence within the permitted period: Schedule 2A, paragraph 8.
• For certain purposes, an overseas dwelling owned by a non-individual is not counted in the same way as one owned by an individual: Schedule 2A, paragraph 11(3)(b).

The key legal point is that the spouse rule is strict. If one spouse owns a dwelling, the other spouse is generally treated as owning it too when testing whether ADS applies.

Analysis

Step 1: Identify what is owned at completion.

The Scottish purchase is tested on the effective date, which is usually completion. If, at that moment, the overseas apartment is still owned by one spouse, it is part of the ownership analysis.

Step 2: Apply the spouse attribution rule.

Even if the Scottish home is bought only in the other spouse’s name, Schedule 2A, paragraph 6(1)(a) treats the overseas apartment as also owned by that buyer. So the buyer is not treated as owning just one dwelling.

Step 3: Check whether the new Scottish purchase is a replacement of a previous main residence.

This is where many people hope the refund rules may help later. But the previous dwelling usually must have been the buyer’s or spouse’s only or main residence. If the overseas apartment is a rental property and has not been the couple’s main residence in the relevant period, it is unlikely to qualify as the previous main residence for repayment purposes.

Step 4: Consider whether a later sale changes the result.

If ADS is due at completion, it is payable then. A later sale of the overseas rental property does not undo the charge unless the statutory repayment conditions are met. If the apartment was not the couple’s only or main residence, those conditions are generally not met.

Step 5: Consider the practical alternatives.

The straightforward way to avoid ADS is to ensure that the overseas dwelling is no longer owned by the spouse before completion of the Scottish purchase. Nick also identified a possible alternative involving ownership through a company, because paragraph 11(3)(b) can affect whether an overseas dwelling is counted where the owner is a non-individual. However, that kind of restructuring can raise other tax and legal issues in the overseas jurisdiction and in the UK, so it should never be treated as a simple administrative step.

This is not an “uninhabitable” or “not suitable for use” case, but it is worth noting that where buyers try to argue that another property should not count because it is not suitable for use as a dwelling, the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. That authority underlines that disrepair arguments are not easy to establish.

Outcome

Buying the Scottish property in one spouse’s sole name will not usually avoid ADS if the other spouse still owns an overseas apartment at completion.

That is because:

• the overseas apartment counts on a worldwide basis;
• spousal ownership is attributed to the buyer; and
• a later sale will not usually generate an ADS refund if the overseas apartment was not the couple’s previous main residence.

In practical terms, if the overseas property is still owned at completion, ADS is likely to be payable.

Practical Steps

If you are in this position, the sensible steps are:

• confirm exactly who owns the overseas dwelling and whether they are married or in a civil partnership at completion;
• check whether the overseas property has in fact been the couple’s only or main residence at any point relevant to the replacement rules;
• if the aim is to avoid ADS, consider whether the overseas property can be sold before completion of the Scottish purchase;
• do not assume that buying in one name only will solve the problem;
• take advice before any transfer to a company, because that may trigger other taxes, legal costs, financing issues, and overseas law consequences;
• ask your solicitor to calculate LBTT and ADS based on the position at the expected completion date, not just the offer date.

Conclusion

For Scottish ADS, a spouse’s overseas rental property can still count against the buyer even if the new home is bought in one name only. If that overseas property is still owned at completion, ADS will usually apply, and a later sale will not normally produce a refund unless the property was the previous main residence.

Legal References Used

• Land and Buildings Transaction Tax (Scotland) Act 2013, Schedule 2A
• Schedule 2A, paragraph 2
• Schedule 2A, paragraph 6(1)(a)
• Schedule 2A, paragraph 8
• Schedule 2A, paragraph 11(2)
• Schedule 2A, paragraph 11(3)(b)
• 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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