Do you pay Scotland’s Additional Dwelling Supplement if you move from a rented home abroad and still own a holiday property?

Introduction

People often search for this issue when they are moving to Scotland from overseas and already own another property, such as a holiday home or investment dwelling. The question usually arises where the person’s current home is rented rather than owned. In that situation, it is easy to assume that moving from one main residence to another should avoid the Additional Dwelling Supplement (ADS). In fact, the rules are narrower than that.

The key point is that ADS relief for replacing a main residence normally depends on disposing of a previous main residence that you owned. Simply giving up a tenancy, even if it has been your only home for many years, is not usually enough to prevent ADS or to obtain a repayment later.

The Question

A buyer is retiring and moving back to Scotland after living abroad for many years in a rented apartment that has been their only or main residence. They have bought a home in Scotland to live in as their retirement home. They also already own a separate holiday property overseas worth more than £40,000.

The buyer wants to know whether ADS applies to the Scottish purchase, and whether they can later reclaim ADS on the basis that they are replacing their main residence abroad, even though that former main residence was rented rather than owned.

Nick’s Explanation

Nick’s answer was that ADS is charged on these facts. The reason is simple: at the effective date of the Scottish purchase, the buyer still owns another dwelling, and they are not disposing of an owned previous main residence.

In anonymised form, his explanation was:

“ADS is charged on the Scottish purchase because, on completion, the buyer already owns another dwelling and is not disposing of an owned previous main residence. Ending a tenancy abroad does not count for an ADS repayment, because the repayment rules require disposal of a property that the buyer owned and used as their only or main residence within the relevant period.”

He also explained the practical route to avoid ADS altogether:

“If the buyer wants to avoid ADS, the practical route is to ensure that, at the effective date of the Scottish purchase, they do not own any other dwelling. That would normally mean disposing of the other property before completion.”

He noted that disposal means the property is no longer owned by the individual, for example by sale or transfer of legal title.

The Law

ADS is the supplement charged on certain purchases of dwellings in Scotland where, broadly, the buyer will own more than one dwelling at the end of the day of the transaction and the transaction is not treated as replacing the buyer’s only or main residence.

The main statutory rules are found in the Land and Buildings Transaction Tax (Scotland) Act 2013, as amended, especially schedule 2A.

In broad terms:

• ADS can apply where a buyer acquires a dwelling in Scotland and, at the end of the effective date, owns more than one dwelling.
• A dwelling anywhere in the world can count, not just one in Scotland or the UK.
• The replacement of main residence exception can disapply ADS, but it generally requires the buyer to have disposed of a previous only or main residence.
• A later repayment may be available if the buyer paid ADS on the new purchase and then disposes of their previous only or main residence within the permitted period.

The important legal distinction is between:

• occupying a property as your only or main residence, and
• disposing of a property interest that you owned and that was your only or main residence.

For ADS replacement and repayment purposes, ownership matters. Vacating rented accommodation is not the same as disposing of an owned dwelling.

Analysis

Step 1: identify whether the buyer owns another dwelling at completion.

Here, the buyer already owns an overseas holiday property. If that property is worth more than £40,000 and is not otherwise excluded, it counts as an additional dwelling for ADS purposes.

Step 2: ask whether the Scottish purchase is a replacement of the buyer’s only or main residence.

The buyer is indeed moving from their long-term home abroad to a new home in Scotland. In everyday language, that looks like a replacement of residence. But the ADS rules do not operate on everyday language alone. They require disposal of a previous main residence that the buyer owned.

Step 3: consider whether giving up the overseas rented apartment is a disposal.

It is not. Ending or vacating a tenancy is not the disposal of an owned dwelling by the buyer. The buyer may have ceased to occupy the rented property, but they have not sold or transferred a property interest that they owned as their main residence.

Step 4: consider whether a repayment claim could be made later.

Again, the difficulty is the same. The repayment rules require disposal of a previous only or main residence that the buyer owned and occupied as such in the relevant period. If the previous main residence was rented, there is no qualifying disposal by the buyer. So the later repayment route is usually unavailable.

Step 5: consider whether the overseas location changes the answer.

No. Overseas property can count for ADS, and an overseas main residence can also be relevant in principle. The problem here is not that the former main residence was abroad. The problem is that it was rented rather than owned.

Step 6: consider how ADS could have been avoided.

If, before completion of the Scottish purchase, the buyer had ceased to own any other dwelling, ADS would generally not arise. On these facts, that would usually require disposal of the overseas holiday property before the effective date of the Scottish purchase.

Step 7: note the limits of any “unsuitable for use” argument.

Sometimes buyers ask whether another property can be ignored because it is uninhabitable or not suitable for use as a dwelling. The threshold for that argument is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799. Ordinary disrepair, inconvenience, or a property needing works will often not be enough. In any event, that issue does not alter the core point here: a holiday property that remains owned at completion will usually be counted unless it clearly falls outside the legislation.

Outcome

On these facts, ADS is payable on the Scottish purchase.

The buyer cannot usually avoid ADS by saying they are moving from a rented main home abroad to an owned main home in Scotland. They also cannot usually reclaim ADS later merely because they vacate that rented home. The repayment route normally requires sale or other disposal of an owned previous main residence.

If the buyer still owns the overseas holiday property at completion, ADS will generally remain due.

Practical Steps

If you are in a similar position, the sensible steps are:

1. List every dwelling you own anywhere in the world at the expected completion date.
2. Check whether any of those dwellings are worth more than £40,000 and fall within the ADS rules.
3. Identify whether your previous only or main residence was owned by you or merely rented.
4. If you are relying on replacement of main residence, check whether there has been, or will be, an actual disposal of an owned previous main residence.
5. If you want to avoid ADS, consider whether any other dwelling can be genuinely disposed of before completion.
6. Keep evidence of occupation, ownership, and disposal dates, including title documents, sale documents, and proof of residence.
7. If you are considering arguing that another property should not count because it is uninhabitable or not suitable for use, assess that carefully in light of Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799, because the threshold is now relatively high.

Conclusion

Moving from a rented home abroad to a home in Scotland does not, by itself, prevent ADS. If you still own another dwelling at completion and you are not disposing of an owned previous main residence, ADS will usually apply. In this kind of case, the crucial issue is ownership and disposal, not simply where you have been living.

Legal References Used

• Land and Buildings Transaction Tax (Scotland) Act 2013
• Land and Buildings Transaction Tax (Scotland) Act 2013, schedule 2A
• Revenue Scotland guidance on Additional Dwelling Supplement and replacement of only or main residence
• 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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