The increase in Additional Dwelling Supplement (ADS) - what you need to know 

The Additional Dwelling Supplement (ADS) is a tax applied to the purchase of additional properties in Scotland. It is not applied to primary residences or first-time buyers. The ADS is paid in addition to the Land and Buildings Transaction Tax (LBTT), which is similar to Stamp Duty and applies to all property purchases over a certain value.

The ADS rate was recently increased from 6% to 8% on December 5, 2024. This increase means that anyone purchasing an additional property after this date will pay a higher tax rate on the purchase price. For example, if someone purchased a second property for £150,000 after December 5th, they would have to pay £12,000 in ADS, compared to £9,000 before the rate change.

The Scottish Government announced the ADS rate increase as part of its 2025-2026 budget. This increase is expected to generate additional revenue for the government. However, it has also been met with criticism from some, who argue that it will discourage investment in the private rental sector and potentially lead to higher rents for tenants.

Some experts believe that the increase in ADS could lead to a slowdown in the property market as buyers delay additional purchases to account for the increased cost. Additionally, the higher tax burden could potentially reduce property prices as buyers factor in the ADS when making offers.