The Team

Scottish Government to extend ADS reclaim time
Scottish Government to extend ADS reclaim time

The Scottish Government has announced that it is to include provisions to extend the time within which the Additional Dwelling Supplement (ADS) can be reclaimed. At the moment, ADS can only be reclaimed up to 18 months from the date on which it’s paid. The Scottish Government are to extend this to 27 months and to make provisions to extend that further if necessary.

The Additional Dwelling Supplement was introduced in 2016 in an effort to dampen the demand in the market caused by buy to let landlords buying up property which would normally be purchased by first-time buyers. When it was introduced, the charge was 3% of the purchase price. This has now increased to 4% and is payable in addition to any normal Land & Buildings Transaction Tax payable on the price of the property.

There are, however, some unintended consequences of this tax relating to the purchase and sale of an owner’s main home. If, for instance, if someone was to buy a new home but not manage to sell their existing home, ADS would apply on the purchase of the new home. Recognising this anomaly, the Scottish Government brought in provisions to allow the ADS to be reclaimed once the original property has been sold.

As a result of the coronavirus, the property market came to more or less a shuddering halt. That has meant that anyone who has bought a new property in anticipation of selling their current property only to find that they are currently unable to sell may well have found,  without the reclaim extension,  that they would be unable to reclaim the ADS they have paid.

Should you wish to discuss your ADS reclaim or any other aspect of residential property purchase, please get in touch.

Note: this provision for the extension  of time to reclaim ADS has now come into effect with the passing  of The Coronavirus (Scotland) (No.2) Act 2020 which received Royal Assent on 26th May 2020