LBTT: ADS changes

The Scottish government has published a consultation on proposed legislative amendments to the Land and Buildings Transactions Tax (LBTT) Additional Dwelling Supplement (ADS) rules. These changes include extending 18-month deadlines to 36 months and providing relief from ADS on divorce or separation. 

This consultation follows the call for evidence that ran between December 2021 and March 2022 and a Summary of responses subsequently published by the Scottish government.

A number of amendments to the Additional Dwelling Supplement (ADS) rules are now suggested, upon which this consultation is based. These amendments include:

Timelines

• Extending the timeline from 18 to 36 months, for:
  • Purchasing a new main residence after disposing of a previous main residence.
  • Disposing of a previous main residence after purchasing a new main residence.
  • Considering whether a property was a buyer’s only or main residence in the period prior to the purchase of a new main residence.

Inherited property

• Disregarding properties inherited post-conclusion of missives on the purchase of a new main residence for the purposes of the ADS.

Small shares in property

• Disregarding, in the context of deemed ownership provisions, property shares from consideration for ADS purposes where the individual taxpayer’s share value is less than £40,000.

Divorce or separation

• Providing relief from the ADS on the purchase of a main residence where an interest in a previous main residence is required to be retained by court order.

Joint buyers

• Where a main residence is purchased jointly and only one buyer can meet the repayment conditions, where no additional relevant properties are held, both buyers will be treated as meeting the repayment conditions.
• Considering disposals of a previous main residence in both the 36 months prior to and after the purchase of a new main residence when determining if the ADS is repayable.
• Treating the disposal of a property in which a buyer is deemed to have an interest solely by virtue of the economic unit provisions as a disposal by the buyer when determining ADS liability

Local authorities

• Relief for local authorities from Land and Buildings Transaction Tax (LBTT) and ADS where the purchase is funded under s.2 of the Housing (Scotland) Act 1988.

The call for evidence closes on 5 April 2023. Responses are encouraged from all interested parties and can be made online, by e-mail or post.

Consultation questions

Question 1: Do you think that the proposed amendments provide for the Scottish Government’s intended change?

Question 2: If not, what amendments would you propose to the draft legislation and on what basis?

Question 3: Do you think that the proposed amendments provide for the Scottish Government’s intended change?

Question 4: If not, what amendments would you propose to the draft legislation and on what basis?

Question 5: Over and above existing legislative arrangements, are there any targeted anti-avoidance measures that the Scottish Government should consider in respect of this proposed amendment?

Question 6: Do you think that the proposed amendments provide for the Scottish Government’s intended change?

Question 7: If not, what amendments would you propose to the draft legislation and on what basis?

Question 8: Over and above existing legislative arrangements, are there any targeted anti-avoidance measures that the Scottish Government should consider in respect of this proposed amendment?

Question 9: Do you think that the proposed amendments provide for the Scottish Government’s intended change?

Question 10: If not, what amendments would you propose to the draft legislation and on what basis?

Question 11: Do you think that the proposed amendments provide for the Scottish Government’s intended changes?

Question 12: If not, what amendments would you propose to the draft legislation and on what basis?

Question 13: Do you think that the proposed amendments provide for the Scottish Government’s intended change?

Question 14: If not, what amendments would you propose to the draft legislation and on what basis?

Question 15: Do you think that the proposed amendments will in any way impact upon equal opportunities, human rights, businesses, island communities, privacy and/or sustainable development in Scotland?

Question 16: If so, please give us your views.

Useful guides on this topic

LBTT: Additional Dwelling Supplement
What is the Additional Dwelling Supplement for the Land and Buildings Transaction Tax? When does it apply? 

LBTT: Land and Buildings Transaction Tax
What is Land and Buildings Transaction Tax (LBTT)? What are the rules?

Scottish LBTT Rates
What are the Land and Buildings Transaction Tax (LBTT) rates?

Call for evidence: Additional Dwelling Supplement
The Scottish Government has launched a call for evidence ‘The Land and Buildings Transaction Tax Additional Dwelling Supplement’ which seeks views on the operation of the Additional Dwelling Supplement (ADS).

External link

Land and Buildings Transaction Tax - Additional Dwelling Supplement legislation changes: consultation