The Additional Dwelling Supplement in Scotland is an 8% surcharge added to Land and Buildings Transaction Tax when you buy a residential property costing £40,000 or more while already owning another dwelling anywhere in the world. You pay it at the same time as your standard LBTT, on the full purchase price, and you can reclaim it in full if you’re replacing your main home and sell the old one within 36 months.1
Who Has to Pay It
The trigger is simple: at the end of the transaction date, do you own at least one other residential property somewhere in the world? If yes, and the new purchase is £40,000 or more, ADS applies. A flat in Glasgow, a house in Manchester, and an apartment in Lisbon all count the same.
Joint buyers are treated as a group. If any one buyer already owns a residential property, the supplement applies to the whole purchase. Spouses, civil partners, and cohabitants go further: they are treated as a single economic unit, so one partner’s existing property counts against the other. Putting the new home in only one name doesn’t get round this.
Companies, trusts, and other non-natural persons pay ADS on every residential purchase, whether or not they already own a dwelling. A company buying its first Scottish home still pays the supplement.
How Much You’ll Pay
For contracts entered into after 4 December 2024, the rate is 8% of the total purchase price. Before that date it was 6%. The charge sits on top of standard LBTT and is calculated on the whole price, not just the portion above a threshold.
Take a £300,000 property. The base LBTT works through the residential bands (0% up to £145,000, 2% to £250,000, 5% to £325,000, 10% to £750,000, 12% above), producing a bill of £4,600. The 8% ADS adds £24,000. Total tax: £28,600. A buyer replacing their only home would pay £4,600 on the same property. A second-home buyer pays more than six times that.
You declare ADS on the same LBTT return you file for the purchase. There is no separate form.
When the Supplement Doesn’t Apply
Some transactions fall outside ADS entirely:
- The purchase price is under £40,000.
- The other property you own is worth less than £40,000, or your share of a jointly owned property is under £40,000.
- The transfer results from a court order or agreement connected to divorce, nullity of marriage, or legal separation. These are exempt from LBTT, and so from ADS.
- You buy six or more dwellings in a single transaction, which is treated as non-residential.
- Specific reliefs for registered social landlords and certain local authority purchases apply.
Gifts of property are exempt from LBTT, so ADS doesn’t attach to them either. Note the limit of these exemptions: they stop ADS on that specific transaction. The property still counts toward your global dwelling total for any future purchase.
Reclaiming the Supplement When You Replace Your Main Home
The main route to a refund is the main-residence replacement rule. If you buy a new home before selling the old one, you’ll pay ADS upfront because you own two properties on the transaction date. Sell the previous home within 36 months and you can reclaim the full amount.
The 36-month period runs both ways from the purchase date of the new property. If you sold your previous main residence in the 36 months before buying, ADS doesn’t apply and there is nothing to reclaim. If you sell afterwards, you pay first and claim later. The 36-month window replaced an earlier 18-month window for transactions with an effective date on or after 1 April 2024.
You Must Have Lived There
Selling in time is not enough. The property you sold must have been your only or main residence at some point during the 36 months before you bought the new one. Council tax bills, utility bills, bank statements at that address, or electoral roll registration all work as evidence.
When a couple buys together, both must meet the residency requirement. If one partner lived in the old property and the other did not, the claim fails. That rule catches couples trying to combine a genuine move with retaining an investment property.
No Extensions, Even for Exceptional Circumstances
Revenue Scotland has said explicitly that it cannot consider exceptional circumstances where the repayment conditions are not met. A collapsed chain, a slow market, or legal complications that push a sale to month 37 will cost you the refund. Plan the sale timeline with a margin, and don’t assume goodwill will bridge a gap.
How to Claim the Refund
The route depends on when the sale completes.
Within 12 months of the original LBTT return filing date, your solicitor can amend the original return through Revenue Scotland’s online SETS system, provided they are the same agent who filed it. A different solicitor submits a repayment claim form by email to Revenue Scotland instead.
After 12 months, you or your agent make a formal claim for repayment of overpaid tax, which must be submitted within five years of the original return filing date. You’ll need proof the previous property was sold and evidence it was your main residence during the relevant period. Acceptable documents include a copy of the disposition of sale, land registration documents, or a solicitor’s letter confirming the sale date. For residency, council tax bills, utility bills, or bank statements are accepted.
Revenue Scotland aims to process claims within 10 days of receiving all the required information. Errors or omissions can trigger financial penalties, so check the detail before you submit.
Filing and Payment Deadlines
The LBTT return, including the ADS calculation, must reach Revenue Scotland within 30 days of the effective date of the transaction, which is usually the settlement (completion) date. Payment is due at the same time, by BACS or CHAPS.
Missing the deadline brings escalating penalties:
- Filing date missed: £100 fixed penalty.
- More than 3 months late: £10 per day for up to 90 days (maximum £900 in daily penalties).
- More than 6 months late: an additional £300 or 5% of the unpaid tax, whichever is greater.
- More than 12 months late: another £300 or 5% of the unpaid tax, whichever is greater.
Interest also accrues on any tax not paid by the filing date, at 2.5% above the Bank of England base rate. On a £24,000 ADS bill, a few months of delay adds real money. A return filed 13 months late could attract the £100 initial penalty, up to £900 in daily penalties, two rounds of percentage-based penalties, and interest on top.
How Inherited and Gifted Property Affect Future Purchases
Inheriting a home doesn’t trigger ADS on the inheritance itself, but that dwelling counts toward your property total the next time you buy. If you inherit a house and then purchase another residential property, you’re a multiple-property owner and ADS applies.
For transactions on or after 1 April 2024, an inherited dwelling only counts if your individual share is worth £40,000 or more. Location is irrelevant. A flat inherited in Spain counts the same as one in Edinburgh. Gifted property follows the same logic: exempt on the way in, but part of the count from then on.
Challenging a Decision
If Revenue Scotland issues an assessment or penalty you disagree with, three routes are open: an internal review by Revenue Scotland, mediation with an independent mediator, or an appeal to the Scottish Tribunals. Revenue Scotland aims to resolve disputes at the earliest stage, and review and mediation are faster and cheaper than a tribunal hearing.