The purchase of a second home in Scotland is subject to a surcharge of 4% of the purchase price, known as the Additional Dwelling Supplement (ADS), on top of the standard rates of LBTT payable on a normal property purchase. This applies to purchases taking place on or after 25 January 2019. Prior to this date the surcharge was 3% of the purchase price. In each case, the minimum purchase price at which ADS applies is £40,000.

Provided an individual sells their previous home within 18 months of purchasing their new home, he or she will be entitled to a refund of any ADS paid on the transaction.

In recognition of the COVID-19 pandemic’s impact on the housing market, the Scottish Parliament is extending the period which home-owners have to sell their main home and claim a refund of ADS to three years. This extension only applies to second homes purchased between 24 September 2018 and 24 March 2020. Scottish Minsters will also have powers, under the Coronavirus (Scotland) (No.2) Bill, to extend this purchase period and the aforementioned sale period, if appropriate.

LBTT’s equivalents in England and Northern Ireland (stamp duty land tax) and Wales (land transaction tax) already provide a three year period for disposal of a previous property following the purchase of a new home. These measures, whilst temporary, bring Scotland into line with the rest of the United Kingdom.