LBTT: ADS Summary of responses

The Scottish government has published a summary of responses to its call for evidence ‘Land and Buildings Transaction Tax (LBTT) - Additional Dwelling Supplement’, which sought views on the operation of the Additional Dwelling Supplement (ADS). 

The original Call for evidence ran between December 2021 and March 2022, attracting 67 responses.

Comments were invited on the current Additional Dwelling Supplement (ADS) legislation, including specific issues which had been raised with the Scottish government.

While there was evidence of consensus in some areas, a range of views on all issues was given, with a number of unique concerns being highlighted.

• A majority were in favour of amending the length of time available to purchase a new main residence (currently 18 months).
  • A common reason for supporting this proposal was the comparable rules for the rest of the UK giving a 36-month period.
• In a similar vein, a majority of respondents supported increasing the length of time in which a previous main residence can be sold in order for a repayment of the ADS to be claimed.
  • The current 18-month timeline for disposal was considered challenging in some markets.
• A common theme identified was the potential unfairness created by the current rules which deem an individual who inherits a part share in a property to be a 100% owner for the purposes of determining if the ADS is due.
• Unfairness was also frequently mentioned in the context of ADS and divorce or separation.
  • Some respondents argued that ADS should not be charged in particular circumstances surrounding divorce/separation.
  • It was also argued that specific personal circumstances, such as domestic abuse, could be taken into account when determining the relevant tax liability.
  • 57% agreed that increasing the length of time available to dispose of a previous main residence would assist in situations of divorce or separation.
• Concerns were raised in the context of joint buyers where is not possible to reclaim the ADS due to the personal circumstances of the taxpayer. The current legislation could create potentially unfair outcomes
  • Many were of the view that the disposal of a previous main residence by either or both parties to the transaction should be sufficient to reclaim the ADS.
• Some respondents argued that property transactions specifically made to increase the availability of social housing should not be liable to either Land Buildings Transactions Tax (LBTT) or the ADS, regardless of whether these transactions involve Local Authorities or Registered Social Landlords.
  • Other responses pointed out that some proportion of the grants to build social housing received by Local Authorities from the Scottish Government may be used to pay the ADS due on relevant transactions.
• 83% supported the consideration of introducing a relief from the ADS for housing co-operatives.
• 96% indicated that they thought there was a case to legislate for an exceptional circumstances provision, allowing Revenue Scotland to apply discretion in some cases.
  • An example given in the consultation was the impact of cladding on a taxpayer’s ability to sell their previous main residence. Respondents also made the case for a broader discretionary provision.

As a result of the responses to this call for evidence, the Scottish government has Opened a consultation on proposed legislation to amend the ADS regime, addressing a number of the points raised.   

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: call for evidence – summary of responses