Coronavirus (Scotland) (No.2) Act
Under new legislation introduced by the Coronavirus (Scotland) (No.2) Act, there will be an increase of 18 months to the period in which some buyers can dispose of a previous main residence and still be eligible for a repayment of the ADS. This will result in some buyers having 36 months rather than 18 months to dispose of their previous main residence and still be eligible for a repayment of ADS.
The new measure will only apply to those buyers who purchased a new main residence prior to 25 March 2020, with an effective date for the purchase of between 24 September 2018 and 24 March 2020. Such buyers will have paid ADS and been unable to dispose of their previous main residence, but were still within the 18 month time limit to dispose of the previous main residence as at 25 March 2020.
Eligibility criteria for reclaiming ADS
Currently where the ADS has been paid on the purchase of a new main residence and the buyer has disposed of their previous main residence within the 18 month time limit, the buyer (or their solicitor acting on their behalf) may claim a repayment of the ADS paid, provided all the qualifying criteria are met for all buyers. This still remains the case, however, under these new measures, the 18 month period for disposing of the previous main residence is extended to 36 months for relevant transactions with an effective date between 24 September 2018 to 24 March 2020:
The criteria, which must be met for all such buyers, to allow a reclaim of payment of ADS, are as follows:
- the buyer(s) have purchased a dwelling with an effective date of between 24 September 2018 and 24 March 2020 and occupied it as their only or main residence and;
- the buyer(s) have paid ADS on the purchase of the new main residence and;
- within the period of 36 months, beginning on the day after the effective date of the purchase transaction, the buyer(s) disposes of the ownership of the previous main residence and the dwelling disposed of was occupied by the buyer(s) as their only or main residence at any time during the period of 18 months prior to and ending on the effective date of purchasing their new main residence.
Q1. Who is eligible to claim repayment of ADS?
A buyer who meets all the eligibility criteria set out above can claim repayment of ADS.
If the purchase of their new main residence has an effective date of between 24 September 2018 and 24 March 2020, they have 36 months to sell their previous main residence. In all other cases, the time limit for disposing of their previous main residence is 18 months, starting on the day after the effective date of the purchase of the new main residence.
Q2. What’s the new criteria for being eligible to make a claim?
The new criteria extends the period for disposal of your previous main residence by 18 months to 36 months, if the effective date of the purchase of your new main residence was between 24 September 2018 and 24 March 2020, you paid ADS on that transaction and you meet all the criteria listed here
Q3. How do I make a claim?
Agents claiming repayment of ADS on behalf of a Taxpayer should either amend the original LBTT return in SETS or else complete the new online repayment claim form and email back to Revenue Scotland.
Taxpayers making a claim for repayment of ADS themselves should use the new online process.
More information on how to claim repayment of ADS is available here
Background to this change
The Land and Buildings Transaction Tax (LBTT) Additional Dwelling Supplement (ADS) was introduced on 1 April 2016. It applies to most purchases of additional dwellings in Scotland over £40,000 by individuals where, at the end of the day that is the effective date of the transaction, a buyer owns two or more dwellings and is not replacing their only or main residence. It also applies to most purchases of dwellings in Scotland over £40,000 by non-natural persons (eg. companies and partnerships). The ADS is charged at 4% of the purchase price and is paid as part of any LBTT due on the relevant purchase.
The arrangements for the ADS recognise that some people may purchase a new home before selling their previous main residence. As such, if the ADS has been paid a buyer can reclaim it if they dispose of the ownership of a previous only or main residence, used as such at any time in the 18 months prior to the effective date of the purchase on which ADS was paid, within the 18 month period commencing on the day following the effective date of the purchase.
Developments related to the COVID-19 pandemic have impacted the housing market. Where sales have been agreed, the temporary closure of the Applications Record by Registers of Scotland on 25 March 2020 and the Scottish Government guidance subsequently published on 31 March 2020, urging buyers not to move whilst stay at home measures are in place, may have resulted in some transactions falling out with the 18 month period for disposing of the ownership of a previous only or main residence, or of such sales falling through completely.
These changes are brought about by the Coronavirus (Scotland) (No.2) Act 2020. The legislation can be found here
Help and Support
If you have any questions or are having difficulty completing the repayment claim form, please contact Revenue Scotland by email: firstname.lastname@example.org.