Guide to Additional Dwelling Supplement for Scottish Property Purchases

When Scotland’s Additional Dwelling Supplement applies and when it can be reclaimed

The Additional Dwelling Supplement (ADS) is an extra charge added to LBTT when buying a residential property in Scotland in certain cases, usually where the buyer will own more than one dwelling at the end of the purchase date and is not replacing their only or main home. It often affects second homes, buy-to-lets, holiday homes, companies, and joint buyers, and the rules changed for transactions effective from 1 April 2024.

• ADS usually applies if the Scottish residential property costs at least £40,000 and, at the end of the effective date, the buyer owns another dwelling anywhere in the world.
• It may not apply if the purchase replaces the buyer’s only or main residence, including where the old main home was sold within the relevant period before the new purchase.
• If a new main home is bought before the old one is sold, ADS is normally paid upfront but may be reclaimed if the old main residence is sold within 36 months and the occupation conditions are met.
• For transactions from 1 April 2024, a jointly owned property is only counted if the buyer’s own share is worth at least £40,000; before that date, the value of the whole property was used.
• Companies and other non-individual buyers usually pay ADS on residential purchases of £40,000 or more even if they do not already own another dwelling, and one joint buyer’s position can affect the whole transaction.
• ADS rates depend on timing: 8% for transactions on or after 5 December 2024, 6% from 16 December 2022, 4% from 25 January 2019, and 3% before that, with a transitional rule for some contracts entered into before 5 December 2024.

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Additional Dwelling Supplement in Scotland: when it applies, when it does not, and when you can reclaim it

The Additional Dwelling Supplement, usually called ADS, is an extra amount of Land and Buildings Transaction Tax charged on some purchases of residential property in Scotland. It matters most where you are buying a second home, a buy-to-let, a holiday property, or a new main home before your old one has been sold. The rules can also catch companies and some joint purchases. This page explains the main rules in practical terms, including the changes that apply for transactions with an effective date on or after 1 April 2024.

What this rule is about

ADS is not a separate tax. It is an additional charge added to any LBTT due on a purchase of residential property in Scotland.

The broad purpose is to charge more tax where, at the end of the effective date of the transaction, the buyer is increasing or retaining their ownership of residential property rather than simply replacing their only or main residence.

In simple terms, ADS is usually relevant if:

• you are buying a dwelling in Scotland, and
• you already own another dwelling anywhere in the world, and
• you are not treated as replacing your only or main residence.

The rules also apply widely to non-individual buyers such as companies, even where they do not already own another dwelling.

What the official source says

The official guidance says ADS will usually apply when a buyer purchases a residential property in Scotland and, at the end of the effective date, owns more than one dwelling anywhere in the world, unless the purchase counts as a replacement of the buyer’s only or main residence.

If there is more than one buyer, the test is applied across the buyers. If any buyer already owns one or more dwellings, that can bring the transaction within ADS.

For transactions with an effective date on or after 1 April 2024, a share in a jointly owned property is only counted for this purpose if the value of that individual share is at least £40,000. Before 1 April 2024, the test looked instead at whether the whole property was worth at least £40,000.

The guidance also says ADS generally applies to purchases of dwellings by non-individuals, including companies and certain trusts, where the consideration is £40,000 or more, even if the buyer owns no other dwellings.

ADS does not apply if, broadly:

• at the end of the effective date you own only one dwelling, or
• the consideration for the property being bought is less than £40,000, or
• any additional dwelling you own is worth less than £40,000, or
• for transactions on or after 1 April 2024, a jointly owned share you hold is worth less than £40,000, or
• you have disposed of your previous only or main residence within the relevant period before buying your new main residence.

That relevant period is 36 months for transactions with an effective date on or after 1 April 2024. For transactions up to and including 31 March 2024, the guidance refers to an 18-month period.

The guidance also explains the repayment rules. If you paid ADS because you bought a new main residence before selling the old one, you may be able to reclaim it if the old residence is sold within 36 months and the other statutory conditions are met. For older transactions, the guidance notes that the period was 18 months.

What this means in practice

The practical question is usually not just “How many properties do I own?” but “What will I own at the end of the effective date, and am I replacing my only or main residence?”

Some common practical outcomes are:

• If you own your home and buy your first rental flat, ADS will usually apply.
• If you buy a new home before your old home has sold, ADS will usually be payable upfront. You may later be able to reclaim it if the old home is sold in time and the conditions are met.
• If you sold your previous main residence within the permitted period before buying the new one, ADS may not apply at all.
• If a company buys a dwelling for £40,000 or more, ADS will usually apply even if it is the company’s first dwelling.
• If an individual buys jointly with a company, the whole transaction is generally brought within ADS.

The £40,000 threshold matters in two different ways:

• the property being bought must generally cost at least £40,000 before ADS is in point, and
• an existing dwelling, or from 1 April 2024 a buyer’s share in a jointly owned dwelling, is ignored if its value is below £40,000.

The guidance also highlights an important distinction between ADS and the separate question of whether an LBTT return must be filed. A buyer may still need to submit an LBTT return on a purchase over £40,000 even if a jointly owned share is ignored for ADS purposes.

How to analyse it

A sensible way to work through ADS is to ask these questions in order.

1. Is the property being bought a residential property in Scotland?
2. Is the consideration at least £40,000?
3. Who are the buyers? Are they individuals, a company, or another non-individual?
4. At the end of the effective date, how many dwellings will each buyer own anywhere in the world?
5. If a buyer owns only a share in another dwelling, what is the value of that share? For transactions from 1 April 2024, the value of the individual share is what matters.
6. Is the purchase a replacement of an only or main residence?
7. If the old main residence has not yet been sold, could ADS be paid now and reclaimed later?
8. If there are joint buyers, do all of them meet the repayment conditions, or do the special rules for spouses, civil partners, and cohabitants affect the result?

When considering replacement of a main residence, the key practical points are:

• what property was the previous only or main residence,
• whether it has been disposed of, and when,
• whether the new property is intended to be the new only or main residence, and
• whether the transaction falls before or after the 1 April 2024 changes.

For repayment claims, the source says the conditions are broadly these:

• the previous property must be sold within 36 months of buying the new one,
• the property sold must have been the buyer’s only or main residence at some point in the 36 months before the purchase that attracted ADS, and
• the buyer must have lived in the purchased property as their only or main residence.

Where there are joint buyers, the source says all buyers must meet the conditions unless the special rules for spouses, civil partners, and cohabitants apply. For transactions with an effective date on or after 1 April 2024, the guidance says only one buyer needs to satisfy conditions about disposal of the old residence and prior occupation of it, but both must satisfy the condition about living in the new residence as their only or main residence.

Example

Illustration: A person owns and lives in House A in Edinburgh. They also own no other property. They agree to buy House B as their new main home, but completion of House B happens before House A is sold. At the end of the effective date for House B, they own two dwellings, so ADS is payable at that stage.

If they then sell House A within 36 months, and House A had been their only or main residence within the 36 months before buying House B, and they have lived in House B as their only or main residence, they may claim repayment of the ADS.

By contrast, if they sell House B instead of House A, the source makes clear that this does not satisfy the repayment condition. The property that must be sold is the previous residence, not the new one that formed part of the taxed transaction.

Why this can be difficult in practice

The main difficulty is that ADS depends heavily on facts at a particular time and on the status of particular properties as an only or main residence. Those are not always straightforward.

Common areas of difficulty include:

• Joint ownership: from 1 April 2024, the value of the buyer’s share matters, not the value of the whole property. That can change the answer.
• Joint buyers: one buyer’s property position can affect the whole transaction.
• Couples and cohabitants: the guidance refers to special rules and economic unit provisions, which can deem one buyer to be treated by reference to the other’s ownership position.
• Timing: whether the transaction falls before or after 1 April 2024 can affect both the replacement test and the repayment rules.
• Repayment conditions: it is not enough that a property is sold within the time limit. It must be the right property, and the occupation conditions must also be met.
• Multiple Dwellings Relief: the source notes that where MDR was claimed, the ADS paid, and so the amount repayable, may have been calculated by reference to average consideration rather than total consideration.

The source also states that where the repayment conditions are not met, Revenue Scotland cannot take account of exceptional circumstances. In practical terms, that means a sympathetic reason for missing the statutory conditions does not itself create a right to repayment.

Rates, transitional rules, and payment

The source states that ADS rates are:

• 8% of the purchase price for transactions on or after 5 December 2024
• 6% for transactions on or after 16 December 2022
• 4% for transactions on or after 25 January 2019
• 3% before 25 January 2019

There is also a transitional rule around the increase to 8%. The source says that if the contract for the land transaction was entered into on or before 4 December 2024, the 6% rate can still apply even if the effective date is on or after 5 December 2024. If the contract was entered into on or after 5 December 2024 and the effective date is on or after that date, the 8% rate applies.

ADS is calculated as part of the LBTT return and paid at the same time as LBTT. Repayments are claimed through the LBTT process using the relevant repayment route for taxpayers or agents.

The source also mentions interest on repayments at the current rate of the higher of 0.5% per annum and the Bank of England Base Rate.

Key takeaways

• ADS usually applies if, at the end of the effective date, you will own more than one dwelling and you are not replacing your only or main residence.
• For transactions from 1 April 2024, the rules are more generous in some cases, including a 36-month period and a share-based £40,000 test for jointly owned property.
• If you pay ADS because your old main home has not yet sold, you may be able to reclaim it later, but only if the specific statutory conditions are met.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide to Additional Dwelling Supplement for Scottish Property Purchases

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