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Find out how the Scottish Government's 1% increase in Additional Dwelling Supplement will affect you

As you may be aware, the second home tax known as Additional Dwelling Supplement (or “ADS”) came into effect on the 1st April 2016. Since then, landlords and second homeowners have been paying ADS at a rate of 3% of total price payable for a property worth over £40,000.00.

As of 25th January 2019, the Scottish Government has increased this flat rate tax to 4%. However, it is still possible to utilise the 3% rate where the date of purchase is on or after the 25th January 2019, but the contract was entered into prior to 12th December 2018 in line with the old regulations. Contracts entered into on or after the 25th January 2019 will be subject of the new rate of 4%.

Albeit a 1% rise may not sound like a lot, it is forecast to generate a huge £25.4 million in 2019-2020. But what does this change look like for a second home purchased at £300,000.00?

Date         1st April 2016                25th January 2019

ADS          £9,000.00                     £12,000.00

You can see that a 1% increase can make a big impact on the amount of ADS payable. The idea behind this is to deter individuals from buying additional properties, which in turn should free up the market for first-time buyers.

If ADS is of concern to you get in touch with Ashlee Watson, Kirsty McDonald or any of our Conveyancing team for assistance.

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