Do I pay ADS if I still own a share of my former home?

If you buy a home in Scotland while you still own a share of your former one, the Additional Dwelling Supplement (ADS) normally applies. It is charged at 8% of the purchase price on transactions on or after 5 December 2024, and it applies to homes of £40,000 or more¹. A share counts: Revenue Scotland treats co-owners as each owning the whole dwelling, so owning part of a property is enough to bring the supplement into play³.

The supplement is not necessarily lost. If you sell that former home within the window that applies to your purchase, you can reclaim the ADS, and Revenue Scotland repays it with interest⁴. The window is 36 months for transactions with an effective date on or after 1 April 2024, and 18 months for transactions up to and including 31 March 2024¹.

The practical problem is timing. ADS is calculated with your Land and Buildings Transaction Tax (LBTT), included on the LBTT return and paid at the same time, so in most cases the money leaves before the old home is sold¹. There is one narrow exception, and it depends on whether the sale completes before the return is filed⁵.

ADS applies in Scotland when you end up owning more than one home

ADS is a Scottish tax. It is charged if you buy an additional residential property in Scotland, and the test is what you own at the end of the effective date of the transaction, not what you plan to do afterwards¹. You pay it if you buy a residential property in Scotland and you already own one or more residential properties anywhere in the world, or if any buyer in a joint purchase already owns one or more residential properties anywhere in the world, and you are not replacing or selling your only or main residence¹.

That last phrase is where most people with a former home sit. If you have already moved out and bought somewhere new, but the old property has not yet sold, you have not replaced your main residence in the way the rules recognise, so the supplement applies. The same logic catches a parent who jointly buys with a child: where the parent owns more than one dwelling and has not replaced their main residence, the ADS applies to the transaction³.

There are exclusions. ADS will not apply if you only own one dwelling at the end of the effective date, if the consideration is less than £40,000, if you own an additional property valued at less than £40,000, or if you have disposed of your only or main residence in the 18 months before purchasing your new main residence¹. Generally, the ADS does not apply to non-residential property transactions³.

The rules around family units and replacing main residences were amended with effect from 30 June 2017⁵. The supplement itself has risen from 3% at its introduction to 8% today, and it was 3% of the purchase price for transactions prior to 25 January 2019 and 4% for transactions on or after that date¹.

ADS rate: 8% of the price on homes of £40,000 or more

The rate you pay depends on when your transaction had its effective date, and the figures are set out in the table below. The supplement is charged on the dwelling part of the chargeable consideration, and the current rate is 8%².

The £40,000 figure appears twice in the rules and does different work. A dwelling valued at £40,000 or higher is within the charge, and a transaction where the consideration is less than £40,000 is outside it¹. For most buyers in Scotland neither threshold is the binding constraint; the ownership test is.

There is a separate exemption for larger purchases. Where six or more dwellings are bought in a single transaction, the purchase is treated as non-residential for LBTT purposes and fully exempted from the ADS⁶. That is a relief aimed at portfolio and block purchases rather than at a household selling one flat.

One consequence of paying ADS is easy to miss. If ADS is payable on the transaction, first-time buyer relief is not available⁷. A buyer who would otherwise qualify for relief can lose it because of a property they are in the process of leaving.

Selling your share of your former home: the 36-month window

The reclaim depends on three conditions being met. You can claim if you sell your previous property within 36 months of the date of buying your new one; the property sold was your only or main residence at any time in the 36 months before you bought the property you paid ADS on; and you have lived in the property you paid ADS on as your only or main residence¹.

The window runs from the date you bought your new main residence, not from the date you moved out of the old one⁴. For transactions with an effective date on or after 1 April 2024 the buyer has a 36-month period to dispose of the previous main residence⁵. For transactions up to and including 31 March 2024, the 36 months is an 18-month period¹. Revenue Scotland's own summary of the position puts it the same way: from 1 April 2024, ADS can be reclaimed if the previous main residence is sold within 36 months, and in 2023/24 the payment could be reclaimed if the previous main residence was sold within 18 months and the claim was made⁸.

For transactions with an effective date on or after 1 April 2024, only one of the buyers is required to meet the sale conditions, but both must meet the residence condition¹. That matters for couples where one person's name is on the former home and the other's is not.

Reclaiming ADS once your former home is sold

The claim is made to Revenue Scotland. You calculate the ADS alongside your LBTT, include it on the LBTT return and pay at the same time as your LBTT, and repayment claims can be made as a taxpayer or through an agent¹. Where a claim for Multiple Dwellings Relief was made as part of the transaction, the amount of ADS reclaimable is the amount paid, based on the average consideration⁵.

The repayment is not discretionary once the conditions are met. Revenue Scotland states that it will aim to process the repayment within 10 working days and will repay the ADS to you with interest⁴. The 10 working days is a processing target that runs from a complete claim, so the total wait includes preparing the form and answering any queries.

The rules differ elsewhere in the UK, which matters if your former home is not in Scotland. In Wales, the taxpayer has up to three years to sell their previous main residence and claim a refund of the higher rate of Land Transaction Tax⁹. In England and Northern Ireland, if you sell or give away your previous main home in the 3 years after you buy your new home, you can apply for a refund of the higher rate part of your Stamp Duty Land Tax bill¹⁰. Scotland's 36-month window sits between the two in length but is measured from the same starting point.

Evidence Revenue Scotland accepts for a reclaim

The repayment claim is made on Revenue Scotland's ADS Repayment Claim Form. An electronic signature can be provided as a typewritten signature, so there is no need to print and sign by hand⁴. All fields marked with an asterisk are mandatory, and incomplete forms may be rejected without repayment being made⁴.

The form asks for the details that let Revenue Scotland match the sale of the former home to the purchase that carried the supplement. The conditions themselves are the evidence: the sale within the window, the former property having been your only or main residence at some point in the 36 months before the purchase, and your occupation of the new property as your only or main residence¹. Where the claim is made through an agent, the agent handles the submission¹.

If you are dealing with a property tax matter that has gone wrong rather than a straightforward reclaim, there are routes beyond the tax authority. A court claim for money can be made online or by post¹¹. For wider housing and money problems in Scotland, Shelter Scotland provides advice on benefits where two homes are involved, noting that you probably cannot get benefits for two homes but could still get benefits for your main home while you are away for a different reason¹².

Where ADS cannot be repaid

The rule here is firm. In cases where the repayment conditions are not met, including where a previous main residence is sold outwith the time limit, no repayment may be claimed, and there are no provisions for exceptional circumstances⁵. Separation, divorce, a slow market or a chain that collapsed do not create an exception.

That is worth stating plainly because the circumstances that produce a former home and a new one often involve exactly those pressures. MoneyHelper sets out the options when a family home is divided on divorce or dissolution: sell the home and both move out, one partner buys the other out, keep the home without changing ownership, or transfer part of the property's value from one partner to the other⁷. Each of those has a different effect on what you own at the effective date of any new purchase, and therefore on whether ADS applies and whether a reclaim is possible later.

There is one timing point that can avoid the supplement altogether rather than require a reclaim. ADS does not require to be paid where the sale of the previous main residence occurs after the effective date of the purchase but before the LBTT return has been made⁵. In practice that means a sale completing in the gap between buying the new home and filing the return, which is a narrow window and depends on how quickly the return is submitted.

For anyone who cannot sell and is carrying two properties, the wider support system is separate from the tax rules. The Debt Arrangement Scheme is a Scottish Government backed scheme that allows you to repay your debts over an extended period, without the threat of creditor legal action, and it is Scotland only, not available in England, Wales or Northern Ireland¹³. It does not prevent landlord possession action for rent arrears, and rent arrears can be excluded from the programme¹⁵. Free, impartial help is available from MoneyHelper and from debt advice charities.