Where the ADS applies, the LBTT(A)(S)A 2016 charges an additional 3% to the LBTT liability for certain transactions with a relevant consideration of £40,000 or more where the subject-matter of that transaction consists of or includes the acquisition of ownership of a dwelling in Scotland.
The ADS payable for a residential property transaction within the scope of the additional amount of LBTT will therefore be charged on the whole relevant consideration for that transaction, effectively meaning that the amount of ADS payable in respect of such a transaction will be 3% of the entire purchase price.
The most common scenario in which buyers are likely to pay the ADS will be where they are purchasing a buy-to-let dwelling or a second home (or holiday home) in addition to their main home. Further details on how the ADS applies to different transactions can be found in part LBTT10013 of the guidance.
The vast majority of residential property transactions, such as first time buyers purchasing their first property or homeowners moving from one main residence to another, will not be liable to the ADS.
The ADS may also apply to transactions that include both residential and non-residential property, such as a shop with a flat above it. Further details relating to how transactions involving residential and non-residential property may be affected and how the ADS will be calculated for such transactions are included in part LBTT10015 of the guidance.
Transitional arrangements apply, with the effect that the ADS will only apply to a transaction involving a purchase of additional property where the contract for the transaction was entered into on or after 28 January 2016 (the date that the Bill and was published on the Scottish Parliament's website) and the effective date of the transaction is on or after 1 April 2016.
However, the ADS will not apply where a contract for a transaction was entered into before 28 January 2016 but not completed until on or after 1 April 2016. Further details on the transitional arrangements can be found in part LBTT10080 of the guidance.
Calculating the ADS payable
Example 1: Acquisition of a second home
Example 2: Acquisition of a second home within the nil rate band