What are the proposed amendments to the Additional Dwelling Supplement (ADS) legislation?
What are the proposed amendments to the Additional Dwelling Supplement (ADS) legislation?28 July 2023 Written by James & George Collie

The Scottish government has proposed amendments to the Additional Dwelling Supplement (ADS) legislation found within Schedule 2A of the Land and Buildings Transaction (Scotland) Act 2012. These proposed amendments are aiming to bring change to the existing framework governing the purchase of additional properties.

This summary article will provide an overview of the proposed amendments, highlighting their key elements and implications for stakeholders in the real estate industry.

What is the Additional Dwelling Supplement?

The Additional Dwelling Supplement is a tax levied in Scotland on the purchase of additional residential properties, such as second homes and buy-to-let investments. It was introduced in 2016 with the intention of ensuring a level playing field for first-time buyers and discouraging the purchase of second homes, which can contribute to rising house prices and restrict housing availability.

The proposed amendments include changes to:

  • Timelines
  • Inherited Property
  • Small Shares
  • Divorce or Separation
  • Joint Buyers / Economic Unit Provisions
  • Relief for Local Authorities


The proposed amendments seek to extend relevant timelines from 18 to 36 months in three specific areas:

  1. The time available for purchasing a new main residence after disposing of a previous main residence.
  2. The time available for disposing of a previous main residence after purchasing a new main residence.
  3. The time period for considering whether a property was the buyer's only or main residence prior to the purchase of a new main residence.

Inherited Property

The amendments aim to disregard properties inherited after the conclusion of purchase agreements for a new main residence for the purposes of the ADS. Additionally, there will be a clarifying amendment regarding the point of ownership of an inherited property.

Small Shares

In the context of deemed ownership provisions, the proposed amendments suggest disregarding property shares for ADS purposes if the individual taxpayer's share value is less than £40,000.

Divorce or Separation

Relief from the ADS will be provided for the purchase of a main residence when a court order requires the retention of an interest in a previous main residence (PMR).

Joint Buyers / Economic Unit Provisions

There are three amendments proposed under this section, covering the main residence joint purchase and the economic unit provisions. The amendments detailed propose:

  1. In cases where a main residence is purchased jointly, only one buyer needs to meet the relevant conditions (disposal of PMR that was their only main residence) and no additional relevant properties are held. Both buyers will be treated as meeting the repayment conditions.
  2. Disposals of a PMR within 36 months prior to purchasing a new main residence may be considered in determining if the ADS is repayable.
  3. The disposal of a property in which a buyer is deemed to have an interest, as per the economic unit provisions, will be treated as a disposal by the buyer.

Relief for Local Authorities

Relief from the Land and Buildings Transaction Tax (LBTT) and ADS will be provided for local authorities when the purchase is funded under section 2 of the Housing (Scotland) Act 1988.

Proposed Amendments

The proposed amendments to the Additional Dwelling Supplement legislation in Scotland entail various changes that aim to refine the existing framework. The extension of timelines, considerations for inherited properties, provisions for small shares, relief for divorce or separation cases, joint buyer arrangements, and local authority relief are all key elements of the proposed amendments. Stakeholders in the real estate industry should familiarise themselves with these proposals to understand their implications and adapt their practices accordingly. For further details and draft clauses, please refer to Section 3 and Annex A of the proposal document.

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