Married couples, those in a civil partnership and cohabitants (those living together as though married, including same-sex cohabitants), along with their dependent children (children under 16, including adopted children), are treated as one economic unit for the purposes of determining how many properties a buyer owns at the end of the day that is the effective date of the transaction.
Any dwelling which is owned by a buyer's spouse, civil partner, cohabitant or dependent child of either the buyer or the buyer's spouse, civil partner or cohabitant is treated as being owned by the buyer him/herself.
Dwellings owned by a spouse, civil partner, cohabitant or their dependent children must therefore be taken into account when determining how many properties a buyer owns at the end of day that is the effective date of the transaction.
Equally, where a buyer's spouse, civil partner, cohabitant or a dependent child is entitled/has a right to the ownership of a dwelling but has not taken title to that dwelling, that buyer will be deemed to be the owner of that dwelling for the purposes of the LBTT(A)(S)A 2016 ("deemed ownership"). For example, if a buyer's spouse were to inherit the ownership of a dwelling, that buyer would be treated as the owner of the dwelling ("deemed ownership").
The ADS will therefore apply to the situation where one spouse owns the existing marital home and the other spouse purchases an additional dwelling. The ADS would be chargeable on the additional purchase, so a married couple would have the same LBTT liability as a married couple who jointly own the home they live in and then jointly or individually buy an additional dwelling.
The ADS will also apply to the purchase by an individual who does not own an existing dwelling but who has a spouse, civil partner, cohabitant, dependent child or dependent child of their spouse, civil partner or cohabitant who does own an existing dwelling.
The above provisions do not apply where the buyer and the buyer's spouse or civil partner have separated. Parties will be considered to have separated where they no longer live together and they do not intend to live together again.
Separation in this context does not require to be formal separation, of the types referenced in paragraphs 4 and 5 of schedule 1 to the LBTT(S)A 2013, but such formal separation would be relevant evidence of practical separation.
Note: Where title to a dwelling is jointly owned by both parties and there is no deemed ownership by either party, any separation would not stop that dwelling from being counted as being owned by both parties.
There will be instances where a married couple, civil partners or cohabitants will sometimes live apart although their relationship has not broken down, for example, due to work commitments. In such a case, which dwelling is a couple's main residence will need to be determined by the facts. Further details relating to how to determine what is an only or main residence can be found in part LBTT10020 of the guidance.
The inclusion of children under 16 within the meaning of "buyer" for the purposes of the LBTT(A)(S)A 2016 reflects the fact that such a child's ownership of residential property is practically the responsibility of their parent(s), and is an anti-avoidance measure to disincentivise avoidance of the ADS by artificially registering title in a child's name.
For the avoidance of doubt, the whole provisions of this part LBTT 10062 of the guidance relate to each individual buyer equally.
The Land and Buildings Transaction Tax (Additional Amount – Second Homes Main Residence Relief) (Scotland) Order 2017 (SSI Order 2017)
The SSI Order 2017 made amendments to the ADS Legislation in connection with spouses, cohabitants and civil partners. The amendments came in to force on 30 June 2017 and provide relief from the ADS where spouses, civil partners and cohabitants jointly buy a new main residence but the previous main residence they are replacing is owned by only one of them. See LBTT 10062A.
Example 46: Spouses buy second home, no replacement of main residence
Example 47: Spouses own two homes, but only one is main residence
Example 48: One spouse owns marital main residence, the other spouse buys a buy-to-let dwelling
Example 49: Cohabitants each own dwellings, one cohabitant purchases buy-to-let dwelling, no replacement of main residence
Example 50: One civil partner owns main residence and the other purchases a rental dwelling
Example 51: Civil partners separate