[ad_1]
\n<\/p>\n
\n <\/span>\n<\/p>\n If this article is supporting your professional development, it can count towards your verifiable CPD hours. Use the pop up at the bottom right corner of your screen to add reading this article as an activity to your online CPD record.<\/p>\n <\/p>\n \n<\/div>\n Following a consultation\u00a0in 2023, the Scottish Government has released its consultation response<\/a> on Land and Building Transaction Tax (LBTT), alongside draft legislation<\/a>. LBTT is a tax on land and buildings transactions in Scotland. From 1 April 2024, a new LBTT relief for local authority purchases will be introduced.\u00a0\u00a0<\/p>\n Changes will also be made to the way in which the Additional Dwelling Supplement (ADS) is applied. A 6% ADS is charged on buying an additional residential property (dwelling) in Scotland.\u00a0<\/p>\n LBTT will not apply where the buyer is a local authority and the acquisition of land is carried out under the powers conferred by s2, Housing (Scotland) Act 1987, or is funded by a grant, etc under s2, Housing (Scotland) Act 1988.\u00a0<\/p>\n A buyer moving between properties has to sell their former home within a specified period to reclaim the ADS. ADS may also be avoided where a new main residence is acquired within a specified period after selling a previous main residence. In both cases, the specified period will be extended from 18 months to 36 months. This will bring Scotland broadly in line with time periods that apply in England, Northern Ireland and Wales for the replacement of a main residence.\u00a0<\/p>\n A limited relief will be introduced to prevent an unexpected ADS charge arising where another property is inherited in the period between the conclusion of missives (exchange), and the purchase (completion) of a new main residence.\u00a0\u00a0<\/p>\n It should be noted that the rules in Scotland will still differ from England, Northern Ireland and Wales, which ignore a 50% or smaller beneficial interest held in a dwelling anywhere in the world that was inherited within the last three years. <\/p>\n The ADS legislation will be amended to deem that a person is not the owner of the dwelling if their share in the ownership interest is worth less than \u00a340,000. This will bring Scotland in line with England, Northern Ireland, and Wales.\u00a0<\/p>\n Scotland will align with the equivalent rules in England, Northern Ireland and Wales by introducing a relief for separated spouses and civil partners that must retain an interest in the former main residence. The relief will apply where a court order on divorce or separation stipulates that a person must retain an interest in a former main residence that remains the main residence of their former spouse or civil partner.\u00a0<\/p>\n The ADS is unique in having an \u2018economic unit\u2019 provision. This means that married couples, those in a civil partnership and cohabitants, along with their dependants (children under 16, including adopted children), are treated as one economic unit for the purposes of determining how many properties a buyer owns at the effective date of the transaction. A new provision will ensure that the disposal of a property in which a buyer is deemed to have an interest solely by virtue of the economic unit provisions will be treated as a disposal by the buyer when determining ADS liability.\u00a0<\/p>\n The general premise is that the conditions must be considered for each buyer. However, relief will be extended to transactions by joint buyers:\u00a0\u00a0<\/p>\n Note that where two or more buyers independently have an interest in a dwelling or dwellings other than the dwelling being purchased, then all buyers must meet the conditions to qualify for a repayment.\u00a0<\/p>\n<\/div>\n ICAEW’s Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.<\/p>\n <\/p>\n \n<\/div>\n
\n New relief for local authority purchases comes in from 1 April 2024, together with numerous changes to the additional dwelling supplement. <\/p>\nNew relief for acquisitions by local authorities\u00a0<\/h2>\n
Timeframe for replacing a main residence\u00a0<\/h2>\n
Inherited property\u00a0<\/h2>\n
Small shares in a property\u00a0<\/h2>\n
Divorce or separation\u00a0<\/h2>\n
Economic unit\u00a0\u00a0<\/h2>\n
Joint buyers\u00a0<\/h2>\n
\n