Additional Dwelling Supplement Update - 8%
The Scottish Government announced a rise in the ADS tax with immediate effect. Find out how this will affect property purchases.
The Scottish Government announced a significant change to the Additional Dwelling Supplement (ADS) as part of its 2025-2026 budget. Effective from 5 December 2024, the ADS rate has increased from 6% to 8%. This change could have a notable impact on buyers purchasing additional properties in Scotland, such as buy-to-let investments or second homes.
What is ADS?
ADS is an additional tax applied on top of the Land and Buildings Transaction Tax (LBTT) for purchases of residential properties where the buyer already owns one or more properties.
Immediate effect
This rate increase comes into force from 5 December 2024 following the budget announcement. Any transaction settling after this date will be subject to the new 8% rate, unless missives were concluded before this date. This may lead to unexpected additional costs for buyers currently finalising purchases.
Who is affected?
If you are buying an additional residential property in Scotland—such as a buy-to-let property or a second home—you will be liable for the increased 8% ADS. The supplement applies to the full purchase price of the property.
For example:
If you’re purchasing a property for £200,000, the ADS amount due will now be £16,000 instead of the previous £12,000.
Signed missives
For residential property transactions, the timing of concluded missives is critical in determining the applicable ADS rate.
If your transaction does not have concluded missives before 5 December 2024, the new higher rate of 8% will apply.
However, if your purchase has concluded missives (i.e. you have a legally binding contract) before this date, the lower 6% rate will still apply—even if the date of entry is after 4 December 2024.
Your solicitor will advise you if and when your missives are concluded. If you are unsure about your position or have any questions, we encourage you to get in touch for clarification.
What should you do?
If you are in the process of purchasing a property and believe this change may apply to you, it is essential to seek professional advice as soon as possible. Understanding the financial implications of the increased ADS can help you prepare for the higher upfront costs and consider your options.
How Middleton Ross can help
We understand that changes to property taxes can be overwhelming. Our experienced team is here to guide you through the process and help you navigate any challenges posed by the new ADS rate. If you are buying a property that may be subject to ADS, or if you are unsure how this change might affect you, please do not hesitate to get in touch.
Contact us today to discuss your situation. Whether you need advice on your property purchase or want to explore the tax implications of your investment plans, we’re here to help.
If you would like to speak to one of our property experts, call us on 01349 862214, email us at mail@middletonross.co.uk, or visit us at our offices in Dingwall or Alness.
We are here to make property transactions as smooth as possible, no matter the circumstances.
