Reclaiming Additional Dwelling Supplement in Scotland

Reclaiming Additional Dwelling Supplement in Scotland


Investing in property can be a lucrative venture, and in Scotland, it is subject to various taxes and regulations. One such tax is the Additional Dwelling Supplement (ADS), which is an additional charge imposed on the purchase of second homes and buy-to-let properties. However, there are certain circumstances where you may be eligible to reclaim the ADS, allowing you to maximize your property investment and potentially reduce your financial burden. In this blog post, we will explore the process of reclaiming Additional Dwelling Supplement in Scotland, providing you with valuable insights and guidelines.

Understanding the Additional Dwelling Supplement (ADS)

The Additional Dwelling Supplement was introduced in Scotland on April 1, 2016, as part of the Land and Buildings Transaction Tax (LBTT) regime. It is a tax levied on top of the existing LBTT and is applicable when purchasing an additional residential property. The ADS rate is currently set at 4% of the total purchase price of the property.

Reclaiming ADS in Scotland

While the Additional Dwelling Supplement is typically non-refundable, there are certain scenarios where you may be eligible to reclaim it. Here are some common situations where a reclaim may be possible:

  1. Selling your main residence within 18 months: If you own two properties and sell your main residence within 18 months of purchasing the additional property, you may qualify for an ADS reclaim. This provision allows individuals to avoid paying ADS when they purchase a new main residence before selling their existing one.
  2. Demolition or substantial reconstruction: If you purchase a property with the intention of demolishing or substantially reconstructing it, you may be eligible to reclaim the ADS. This applies if the property is uninhabitable, and you provide evidence of your intent to demolish or substantially reconstruct it within a specific timeframe.
  3. Replacement of your main residence: Reclaiming ADS is possible when you sell your main residence within 18 months of buying a new one. This can be advantageous if you plan to upgrade or downsize your primary residence and own more than one property during the transition period.
  4. Unforeseen circumstances: In certain exceptional cases, where circumstances change beyond your control, you may be able to reclaim ADS. These could include, but are not limited to, the death of a partner, a change in employment location, or a relationship breakdown.

The Reclaim Process

To initiate the ADS reclaim process, you will need to submit an application to Revenue Scotland, the body responsible for administering the tax. Here are the essential steps:

  1. Gather the required documentation: Collect all relevant documentation, such as the LBTT return, evidence of the sale of your main residence, or the intent to demolish or substantially reconstruct a property. Additionally, include any supporting documents related to unforeseen circumstances.
  2. Complete the ADS reclaim application: Obtain the necessary forms from the Revenue Scotland website or contact their helpline to request the appropriate paperwork. Carefully fill out the application, ensuring you provide accurate information and attach the supporting documents.
  3. Submit the application: Once the application is complete, submit it to Revenue Scotland through the designated channels. Ensure you retain a copy of the application for your records.
  4. Await a decision: Revenue Scotland will review your application and make a decision based on the provided information. They may request additional details if necessary. The processing time may vary, but they strive to respond within a reasonable timeframe.
  5. Reclaim or appeal: If your application is successful, Revenue Scotland will inform you of the amount to be refunded. If your application is rejected or you disagree with the decision, you have the option to appeal the decision

Revenue Scotland have produced a decent How To video on their YouTube channel. It’s worth a watch: