The rate of LBTT Additional Dwelling Supplement (ADS) has increased from 4% to 6%. The revised rate applies to contracts entered into on or after 16 December 2022.
The ADS is an additional amount of Land and Buildings Transaction Tax (LBTT) which is applied to the 'relevant consideration' (normally the purchase price).
ADS is normally payable when a buyer or buyers purchase a dwelling in Scotland which results in them owning more than one dwelling, and they are not replacing their main residence, where the total purchase price of the dwelling exceeds £40,000.
ADS is usually payable when:
- an individual buys a residential property in Scotland, and they already own one or more residential properties anywhere in the world;
- if there are two or more buyers: if any of the buyers already owns one or more residential properties anywhere in the world; and
- the transaction is not undertaken to replacing the buyer's main residence.
Each residential property is only counted if it has a value of £40,000 or more.
The ADS also applies to most purchases of residential properties in Scotland by non-natural persons, including companies and certain trusts.
For transactions prior to 25 January 2019, the ADS rate was 3% of the purchase price, so the latest increase represents a doubling of the ADS rate over the past four years.