Revenue Scotland LBTT: Guide to Completing the Additional Dwelling Supplement Section Online

Additional Dwelling Supplement Guidance

This section provides guidance on completing the Additional Dwelling Supplement (ADS) part of the Land and Buildings Transaction Tax (LBTT) return. It outlines the principles and concepts necessary for accurate submission.

• Understanding the purpose of ADS in the context of LBTT.
• Step-by-step instructions for completing the ADS section.
• Clarification on eligibility and exemptions for ADS.
• Details on how to amend or pay the ADS online.
• Contact information for further assistance.

Understanding the Additional Dwelling Supplement in Scotland

When purchasing property in Scotland, buyers may encounter various taxes, one of which is the Additional Dwelling Supplement (ADS). This tax is part of the Land and Buildings Transaction Tax (LBTT) system and applies to those buying additional residential properties. This article will explore what ADS is, who it affects, and how it is calculated and paid.

What is the Additional Dwelling Supplement?

The Additional Dwelling Supplement is a tax applied to the purchase of additional residential properties in Scotland. It is an extra charge on top of the standard LBTT and is aimed at buyers who already own a residential property and are purchasing another. This includes buy-to-let investors and those buying second homes.

Who Needs to Pay ADS?

ADS is applicable to individuals and companies purchasing additional residential properties. Here are some scenarios where ADS might apply:

• Buy-to-Let Investors: If you are buying a property to rent out and already own another residential property, you will likely need to pay ADS.
• Second Home Buyers: Those purchasing a holiday home or a second property for personal use will also be subject to ADS if they already own a home.
• Companies: Businesses buying residential properties are required to pay ADS, regardless of how many properties they already own.

It’s important to note that ADS applies even if the existing property is located outside Scotland.

How is ADS Calculated?

The Additional Dwelling Supplement is calculated as a percentage of the purchase price of the property. As of the latest guidelines, the ADS rate is 4%. This means if you purchase a second property for £200,000, the ADS would be £8,000.

Here’s a simple formula to calculate ADS:

ADS = Purchase Price x ADS Rate

For example, if you buy a property for £300,000, the ADS would be:

ADS = £300,000 x 0.04 = £12,000

Exemptions and Reliefs

There are certain situations where ADS may not apply, or where reliefs can be claimed:

• Replacing Main Residence: If you are selling your main residence and buying a new one, ADS may not apply, provided the sale and purchase occur within a specific timeframe.
• Transactions Below £40,000: Properties purchased for less than £40,000 are exempt from ADS.
• Multiple Dwellings Relief: This relief can reduce the amount of ADS payable when buying multiple properties in a single transaction.

For more detailed information on exemptions and reliefs, you can visit the Revenue Scotland ADS page.

How to Pay ADS

Paying the Additional Dwelling Supplement is part of the process of submitting an LBTT return. Here’s how you can do it:

1. Submit an LBTT Return: You must submit an LBTT return to Revenue Scotland, even if no LBTT is due.
2. Calculate ADS: Use the purchase price and the ADS rate to calculate the amount due.
3. Make Payment: Payment can be made online through the Revenue Scotland portal.

It’s essential to ensure that the ADS is paid promptly to avoid any penalties or interest charges.

Reclaiming ADS

In some cases, you may be eligible to reclaim ADS. This typically occurs if you sell your previous main residence within 18 months of buying a new one. To reclaim ADS, you need to:

1. Sell Previous Residence: Ensure the sale of your previous main residence occurs within 18 months.
2. Submit a Claim: Submit a claim to Revenue Scotland to reclaim the ADS paid.
3. Provide Evidence: You may need to provide evidence of the sale and purchase transactions.

For more information on reclaiming ADS, visit the Revenue Scotland ADS page.

Conclusion

The Additional Dwelling Supplement is an important consideration for anyone purchasing additional residential properties in Scotland. Understanding when it applies, how it is calculated, and the process for payment and potential reclaiming can help ensure compliance and avoid unexpected costs. For further guidance, always refer to the official Revenue Scotland ADS page.

Useful article? You may find it helpful to read the original guidance here: Revenue Scotland LBTT: Guide to Completing the Additional Dwelling Supplement Section Online

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