The Additional Dwelling Supplement is an extra 8% tax on the full price of a home in Scotland. It applies when you already own another home anywhere in the world and are not replacing your main residence. If you buy your next home before your old one sells, you pay the supplement at first. However, you can claim it back if you sell your old home within 36 months. This guide explains when the supplement applies, how it works alongside LBTT and how to get it back.
Are you buying a second home, a buy to let flat or a new home before your current one has sold? Then the Additional Dwelling Supplement will almost certainly come up when you speak to your solicitor. At 8% of the whole price, it is often the biggest cost in the purchase after the deposit. On a £150,000 buy to let flat, for example, it adds £12,000 to the bill.
The rules are also easy to get wrong. Much of the guidance online is written for Stamp Duty in England, which works differently. Scotland has its own rules, and Revenue Scotland collects the tax. Several of those rules changed for purchases completing on or after 1 April 2024, so older articles may be out of date too.
This guide sets out the Scottish position as it stands in October 2026. It covers when the supplement applies and how it sits alongside standard LBTT. It also explains what happens if you buy before you sell, and how the rules treat couples, inherited property and homes abroad.
What Is the Additional Dwelling Supplement and When Does It Apply?
The Additional Dwelling Supplement, often shortened to ADS, is a surcharge on top of Land and Buildings Transaction Tax (LBTT). LBTT is the Scottish tax you pay when you buy property. The supplement started on 1 April 2016 at 3% and has risen in stages since then. It now stands at 8% for contracts entered into on or after 5 December 2024. The Scottish Budget for 2026 to 2027 left that rate unchanged.
In broad terms, the Additional Dwelling Supplement applies when all three of these are true:
- you are buying a residential property in Scotland for £40,000 or more;
- at the end of the day your purchase completes, you will own more than one home, counting property anywhere in the world; and
- you are not replacing your only or main residence.
Who usually pays it
Typical examples include buying a buy to let flat while you still own your own home, or buying a holiday cottage. Buying a flat in your own name for a son or daughter at university is another common one. Companies and most trusts also pay the Additional Dwelling Supplement on almost every residential purchase, even where they own no other property.
The £40,000 threshold
The £40,000 figure works in two ways. First, the Additional Dwelling Supplement does not apply if the property you are buying costs less than £40,000. Second, the law ignores a property you already own if it is worth less than £40,000. Since 1 April 2024, that second test looks at the value of your own share. So a quarter share of a £120,000 house, worth £30,000, no longer counts.
Homes abroad count too
It does not matter where your other home is. A flat in England, a villa in Spain or a family home in Ireland can all count. The test is whether you own it, or hold something equivalent to ownership, and whether your share is worth £40,000 or more. In practice, this is one of the most common surprises for buyers.
When the supplement does not apply
The main exception is replacing your main residence. If you sell your home and buy another one to live in, you pay standard LBTT only. The same applies if you sold your previous main residence in the 36 months before buying your new one. Importantly, this works even if you own other property, such as a buy to let flat, as long as the new home replaces your main residence. For purchases completing before 1 April 2024, that look-back period was 18 months.
How the Supplement Works Alongside Standard LBTT
Standard LBTT works in slices, much like income tax. For residential property, the current rates are:
- 0% on the first £145,000
- 2% on the portion from £145,001 to £250,000
- 5% on the portion from £250,001 to £325,000
- 10% on the portion from £325,001 to £750,000
- 12% on anything over £750,000
The Additional Dwelling Supplement works quite differently. It is a flat 8% of the whole price, including the first £145,000 that would otherwise be tax free. As a result, it often costs far more than the standard LBTT itself. First-time buyer relief cannot help either, because anyone who pays the supplement already owns property.
Two worked examples
Say you buy a buy to let flat in Motherwell for £120,000 while you still own your home. Standard LBTT is nil, because the price is below £145,000. Even so, the supplement adds 8% of £120,000, so you pay £9,600.
Now take a £200,000 house bought as a second home. Standard LBTT comes to £1,100, which is 2% of the £55,000 above £145,000. On top of that, the supplement adds £16,000. The total bill is therefore £17,100, and the supplement makes up over 90% of it.
You can test your own figures with the Revenue Scotland property tax calculator. Our guide to buying your first home in Scotland explains the standard LBTT bands and first-time buyer relief in more detail.
How and when you pay
Your solicitor includes the supplement in your LBTT return and pays it along with the standard tax. The return and payment are due within 30 days of the effective date, which is normally your date of entry. In practice, your solicitor will need the funds before settlement, so build the supplement into your budget from the outset.
Buying Before You Have Sold Your Previous Main Residence
This is the situation that catches out most homeowners. You find the right house, but your own home has not sold yet. On the day you complete, you own two homes, so the Additional Dwelling Supplement applies. That is the case even though you fully intend to sell.
The law does not wait to see whether you sell. Instead, you pay the supplement at the outset and claim it back once your sale goes through. For many buyers, this means finding an extra 8% of the price at short notice, often from savings or a bridging loan.
The 36-month window
For purchases completing on or after 1 April 2024, you have 36 months from the effective date of your new purchase to sell your previous main residence. Before that, the window was only 18 months. The longer period came in through the Land and Buildings Transaction Tax (Miscellaneous Amendments) (Scotland) Order 2024.
The window is strict. Revenue Scotland has no power to extend it. Indeed, the tax tribunal has confirmed that neither it nor Revenue Scotland can make allowances for a late sale. So if your sale falls through or the market is slow, keep a close eye on the date.
The conditions for a repayment
To reclaim the supplement, you must meet three conditions:
- you sell your previous home within 36 months of buying the new one;
- the home you sold was your only or main residence at some point in the 36 months before you bought the new one; and
- you have lived in the new property as your only or main residence.
The home you sell must also be a different property from the one you bought. For example, selling the new house within 36 months does not entitle you to a refund.
If you decide to let your old home instead
Some homeowners decide to keep the old house and let it out. That can be a sensible choice, but the supplement then stays paid. You also take on the legal duties of a private landlord from day one. Our article on what Scottish landlords need to know from 6 October 2026 explains the latest changes.
Reclaiming the Supplement and the Time Limit for Doing So
Once your previous home has sold, you can claim the Additional Dwelling Supplement back from Revenue Scotland. Better still, Revenue Scotland adds interest at the higher of 0.5% a year or the Bank of England base rate.
Which route applies
There are two routes, and the right one depends on timing:
- Within 12 months of the filing date of your original LBTT return, your solicitor can simply amend the return. If we submitted it, we can make that amendment for you online.
- After that 12-month period, you make a separate repayment claim instead. The outer limit for that claim is five years from the date your original return was due.
So, in short, you have 36 months to sell and up to five years to claim. Either way, it makes sense to claim as soon as your sale settles.
What you need to provide
Revenue Scotland will want evidence that your old home was your main residence. A council tax bill, utility bill or bank statement normally does the job. If you claim more than 12 months after the original return, you also need proof of the sale. A copy of the disposition, or a solicitor’s letter confirming the date of sale, is usually enough. Revenue Scotland aims to process claims within 10 working days of receiving everything it needs. Full details are on its repayment claim page.
A practical tip
Don’t leave the claim until the last minute. The interest helps, but the money is better back in your account. On the other hand, if you never claimed when your sale went through, check whether you are still within the five-year limit. It may not be too late.
Joint Buyers and How the Rules Treat Couples
Where two or more people buy together, the Additional Dwelling Supplement applies to the whole purchase if any one of them triggers it. So if you buy a flat with a friend who still owns a house, the supplement is due on the full price. That is true even if you have never owned property before.
Married couples, civil partners and cohabitants
The law treats spouses, civil partners and cohabitants as a single unit, along with any children under 16. In other words, a home your partner owns counts as yours too. Buying in one name only does not avoid the supplement. For instance, if your wife owns the family home and you buy a buy to let flat in your sole name, you still pay it.
The position changes once you have separated and no longer intend to live together. At that point, your former partner’s property no longer counts as yours.
Improvements since April 2024
Three changes help couples where the purchase completes on or after 1 April 2024:
- if a couple buys a new home to replace one that only one of them owned, relief from the supplement can apply;
- to reclaim the supplement, only one of you needs to have sold the old home and lived in it, although you must both live in the new one; and
- a share in a former family home that you keep under a court order or formal separation agreement can be ignored, if certain conditions are met.
Revenue Scotland’s technical guidance sets out the detailed conditions for each.
Buying only a share of a property
If you already own part of a property and buy a further share, for example from a former partner, the supplement does not normally apply. Standard LBTT may still be due if you pay for the share or take over part of the mortgage. Buying a share of a different property is another matter. The supplement can apply in the usual way, worked out on the price you pay for your share. Where that price is below £40,000, however, there is no supplement to pay.
Inherited Property and Its Effect on the Supplement
Inheriting a house does not trigger the Additional Dwelling Supplement, and you pay no LBTT on an inheritance. Even so, the inherited property can count as a home you own when you buy another one later.
When an inherited home starts to count
- An inherited property counts as yours from the earliest of these points:
the end of the executry, once the executors have taken all the steps needed to administer the estate; - the date the executors sign and deliver a disposition or docket transfer to you, even if the title is registered later; or
- for property abroad, the date it passes to you under the law of that country.
In practice, a house still tied up in an executry does not usually count against you. Once the executors transfer it to you, it does. Our executry team can help you plan the timing where a sale or transfer is on the horizon.
Inherited shares
Since 1 April 2024, an inherited share counts only if your share is worth £40,000 or more. A one-fifth share of a £150,000 house, worth £30,000, would not count. A half share of the same house would. That can cause real problems. Say you inherit half of your late mother’s house and then buy your first home of your own. Because you are not replacing a main residence, you would usually pay the supplement.
Some UK-wide guidance mentions a rule that ignores an inherited share of 50% or less for three years. That rule applies to the equivalent taxes in England, Northern Ireland and Wales. It is not part of the Scottish rules, which is why Scottish advice matters here.
Inheriting part way through a purchase
There is also a newer relief for anyone who inherits a home after concluding missives on a new main residence but before the purchase completes. In that case, the law ignores the inherited property for that purchase. You must claim this relief in your LBTT return, so let your solicitor know straight away.
Why Choose Pomphreys?
Pomphreys has helped people across Wishaw, Motherwell and North Lanarkshire buy and sell property since 1897. Our conveyancing and estate agency teams work under one roof. That means we can look after buying a house in Scotland and the sale of your current home side by side. That matters with the supplement, because the timing of one can change the tax on the other.
We check at the outset whether the Additional Dwelling Supplement applies, work out the figures and explain them in plain English.
If you are buying before you sell, we keep track of the 36-month window and make the repayment claim as soon as your sale settles. We also act for landlords and investors buying buy to let property. Meanwhile, our estate agency team can market your current home through our property listings, and our fees are clear from the start.
Buying a Second Home or Buy to Let in Lanarkshire?
Whether you are adding to a portfolio or moving before your sale has gone through, a short conversation at the start can save you money and worry. Get in touch with Pomphreys or call us on 01698 373365. We will tell you exactly what tax you will pay, and how to get the supplement back if you are entitled to it.
Frequently Asked Questions about the Additional Dwelling Supplement
Do I pay the supplement if I am buying a new home before selling my old one?
Yes, usually. If you still own your previous home when the new purchase completes, you pay the supplement at that point. However, you can reclaim it if you sell your previous main residence within 36 months and live in the new home as your main residence. Revenue Scotland repays the supplement with interest.
How long do I have to reclaim the Additional Dwelling Supplement?
You must sell your old home within 36 months of the effective date of your new purchase. To get the money back, your solicitor can amend your LBTT return within 12 months of its filing date. After that, you can make a repayment claim up to five years from the date the return was due. Revenue Scotland cannot extend these limits.
Does a property I own abroad count towards the supplement?
Yes. Homes anywhere in the world count, including elsewhere in the UK, as long as your share is worth £40,000 or more. Owning a home abroad does not, however, stop you replacing your main residence in Scotland without paying the supplement.
Does the supplement apply if I am buying only a share of a property?
It can. If you already own another home, the supplement applies to the price you pay for the share, provided that price is £40,000 or more. If you already own part of the property and are buying the rest, for example from a former partner, the supplement does not normally apply.
Is the Additional Dwelling Supplement charged on the whole price?
Yes. It is 8% of the full purchase price, not just the part above a threshold. That is different from standard LBTT, which applies in bands. For example, on a £120,000 flat you pay no standard LBTT but £9,600 in supplement.
Do companies pay the Additional Dwelling Supplement?
Yes, in almost all cases. A company buying residential property for £40,000 or more pays the Additional Dwelling Supplement, even if it owns no other homes. For that reason, it is worth taking advice before buying a buy to let through a limited company.
This article is by Robert Allan
Robert Allan, Partner
Robert Allan graduated from the University of Strathclyde in 1980. Robert deals with all Residential and Commercial Conveyancing, specialising in leases for shops and office premises.
Tel: 01698 373365
Email: rha@pomphreyslaw.com
