Additional Dwelling Supplement: Proposals for Change

Proposed Change

The Scottish Government intends to legislate to increase the various timelines in the Additional Dwelling Supplement (ADS) legislation from 18 months to 36 months. The effect of this will be that:

• the time available to purchase a new main residence after disposing of a previous main residence will increase from 18 to 36 months. This is relevant where, for example, two or more properties are held by the buyer at the effective date and the previous main residence was disposed of prior to that date   

In terms of determining whether a repayment of the ADS can be claimed:

• the time available for disposing of a previous main residence after purchasing a new main residence will increase from 18 to 36 months
• the time period for considering whether a  property was a buyer’s only or main residence in the period prior to the purchase of a new main residence will increase from 18 to 36 months

The Scottish Government considers that this increase:

• takes account of local housing market variation, including n rural or remote areas of Scotland. The available data shows that regional housing markets can vary significantly, with some more reliably ‘buoyant’ than others
• will assist in cases where more time than 18 months is needed to dispose of the ownership of a previous main residence
• will assist taxpayers in “outlier” cases where purchase or disposal within the current 18 month periods does not occur for unexpected and sometimes personal reasons

Although it is recognised that the extension to 36 months may still not be sufficient in all situations, the Scottish Government considers that this represents a balanced approach. It takes account of the specifics of the housing market in Scotland and the fact that sales or purchases may be delayed for a range of reasons, whilst also providing certainty about tax revenues.