Additional Dwelling Supplement

The Additional Dwelling Supplement (ADS) applies to most purchases of additional residential dwellings.

What is the Additional Dwelling Supplement?

The Additional Dwelling Supplement (ADS) was introduced in April 2016 and applies to all transactions involving the purchase of an additional residential dwelling over £40,000. Additional dwelling types include buy to let investments and second homes.

The Scottish Government introduced ADS following the UK Government's decision to introduce an SDLT supplement on the purchase of additional residential properties.

The Government wanted to avoid a tax position which could make investing in Scottish property more attractive when compared to the rest of the UK. Without a supplement it could make it harder for first time buyers to purchase Scottish property at the lower end of the market.

What are the additional dwelling LBTT rates?

The additional dwelling supplement is applied to the total purchase price of a property above an initial threshold of £40,000. From December 16th 2022, ADS has increased to 6% from the previous level of 4%.

The table below shows both the standard LBTT rate and the rate with the additional dwelling supplement applied.

Tax Band	Normal Rate	Additional Dwelling Rate *
less than £145k	0%	6%**
£145k to £250k	2%	8%
£250k to £325k	5%	11%
£325k to £750k	10%	16%
rest over £750k	12%	18%
* Percentage figures show LBTT and ADS rates combined. ADS is calculated in addition to LBTT and is applied at 4% to the total purchase price above £40k. ** An additional dwelling purchased for less than £40k will attract 0% tax. For purchases from £40k to £145k the rate will be 6% on the full purchase price.

For an additional dwelling, no tax will be paid if the value is below £40,000. Between £40,000 and £145,000 buyers will pay 6% on the full purchase price. Between £145,000 and £250,000 buyers will pay 8% within this band, 11% on the portion between £250,000 and £325,000, 16% within the next band up to £750,000 and 18% over that.

Replacing a Main Residence

Someone who is replacing their main residence can claim a refund of ADS if their old home is sold within 18 months of buying their new one. In this situation a refund claim should be submitted to the Tax Authority under section 107 of the Revenue Scotland and Tax Powers Act 2014.

Ownership of an existing property

The additional dwelling supplement will normally be charged if the purchaser of a new property already owns a dwelling, and the dwelling is not replacing their existing main residence. Dwellings outside Scotland are also to be counted when assessing previous ownership status.

Ownership of an existing dwelling is not to be counted if the value of the ownership interest is less than £40,000.

Joint purchases

The additional dwelling supplement will be applied to a transaction if any person in a Joint purchase already owns a property. Joint purchasers include Spouses, civil partners, cohabitants and children of these groups .

Purchases of 6 or more dwellings

Where six or more separate dwellings are the subject of a single transaction, those dwellings are treated as non residential. In these cases the transaction is normally exempt from the additional dwelling supplement.