Recent Amendments to ADS: The Land and Building Transaction Tax (Additional Amount - Second Homes Main Residence Relief) (Scotland) Order 2017

As announced by Revenue Scotland this week, the Land and Building Transaction Tax (Additional Amount – Second Homes Main Residence Relief) (Scotland) Order 2017 came into effect on 30 June 2017.  The new Order acts as an amendment to the existing Additional Dwelling Supplement (ADS) rules which concerns replacing main residences and the position regarding family units as detailed in Schedule 2A of the Land and Buildings Transaction Tax (Scotland) Act 2013. The amendment incorporates Paragraphs 8A and 9A in to the 2013 Act and will apply to all contracts entered into on or after 20 May 2017 and transactions completed on or after 30 June 2017.

Purchasers can now benefit from ADS relief in circumstances previously caught by the ADS rules. Prior to the recent amendment, where spouses or cohabitants were seen as not replacing their main residence then any purchases would be subject to ADS. For example, if one spouse owned the marital home and the other owned a separate property, if they decided to purchase a new marital home jointly, ADS would be payable on their new purchase. Now, relief can be applied to such purchases, so long as both buyers are replacing their main residence.

Couples are now also able to reclaim any ADS paid when their previous main residence was sold within a period of 18 months from the date it was purchased.

Since it came into force on 1 April 2016, ADS has proved to be an additional financial expense for purchasers who own multiple properties. The most recent amendments will help alleviate such costs for couples and cohabitants in certain circumstances involving family units and situations where they are replacing their main residence. 

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