The Scottish Government has announced that the Additional Dwelling Supplement (ADS), which is the Scottish property second home tax, will be increasing from a rate of 4% to 6% effective today. This means that for any property transaction on or after the 16th of December 2022, for which missives have not been concluded, then the higher rate of 6% will apply.

ADS is charged on the purchase of additional residential property such as:- a second home, a rental property, a holiday home, and properties which are used by family and friends, even if the owner of the property does not charge rent.

ADS is charged at a flat rate of 6% on the purchase price of any property over £40,000 and an example is shown below:

Sarah purchases a buy to let property for £130,000. As the property is over the threshold of £40,000 then the ADS Sarah would pay is £7,800. Under the old ADS rate of 4% Sarah would pay £5,200 in tax for the same property.