Extension of the period to reclaim Additional Dwelling Supplement

At the present time, where Additional Dwelling Supplement (ADS) applies there is a further 4% charge made on the full price, which is added to the Land & Buildings Transaction Tax liability.

The most common scenario in which buyers are likely to pay the ADS will be where they are purchasing a buy-to-let property or a second home (or holiday home) in addition to their main home.

However, this the ADS is also paid if someone purchases a new main residence but has not been able to dispose of their previous main residence, and therefore the purchase of the new main residence is an “additional dwelling”.

Under current legislation, where the ADS has been paid when purchasing a property, and the buyer has been able to dispose of their previous main residence within an 18 month period they may claim a repayment of the ADS paid. This allows individuals some scope and freedom to change their main residence over a period of time, rather than completing such a move on the same day.

Unfortunately, given the current difficulties in selling a property under the Government “stay at home” guidelines, there may be situations where an owner will now not be able to complete a sale of their previous main residence within this 18 month time period.

As a result, the Scottish Government has announced that it proposes to implement measures in the second Coronavirus Bill to extend the time within which a main residence must be sold in order to claim back the (ADS). This extension will only apply where the ADS payment was made prior to a particular date which is yet to be confirmed.

This change, when implemented, will hopefully assist owners who have been caught in this situation due to the ongoing Covid-19 crisis.

If you have any queries then please do not hesitate to contact our Residential Team.

Lindsay Bishop

Lindsay Bishop
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Alison Martin

Alison Martin
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May 4, 2020