SNP’s new tax misery for owners of second homes

LANDLORDS and second-home

are facing a tax hit under plans by the SNP to raise a record £140 million.

The Additional Dwelling Supplement (ADS) was introduced in 2016 as a tax on second homes.

The Scottish Government had hoped a 4 per cent surcharge on second properties would act as a disincentive to landlords and holiday home purchases.

Last year, it appeared Ministers might perform a U-turn and scrap the tax after an SNP member said some people felt they were being unfairly charged.

However, in the latest Scottish Budget, the tax is being kept in place and plans are under way to ramp-up the amount of revenue generated. Officials predict the ADS will bring in £140 million a year by 2024-25 – £11 million more than this year.

Last night, Scottish Tory housing spokesman Graham Simpson said: ‘The ADS is higher in Scotland than in the rest of the UK.

‘We should be making sure people aren’t unfairly penalised and ADS should be kept under review.

‘The SNP has made sympathetic noises, but when it comes down to it they simply prefer raising cash from hard-working taxpayers than encouraging the economy.’

Scots already pay the Land and Buildings Transaction Tax (LBTT) when they buy a home.

If they already own another property, they may also be liable for the ADS which, last year, rose from 3 to 4 per cent – meaning that buying a second home or rental property for £100,000 would pay an additional £4,000.

In the current tax year, Revenue Scotland has demanded almost 20,000 people pay ADS, the Scottish Property Federation said. In December, the tax brought in £14.1 million – £5 million more than the same period the year before.

Figures outlined in the latest Budget show that in 2020-21 the Scottish Government is set to make £129 million from second home owners. This will increase to £140 million by 2024-25.

Last year senior Nationalist MSP Bruce Crawford urged the Scottish Government to reconsider the tax.

In a letter to the then Public Finance Minister Kate Forbes, he said: ‘You told us you are sympathetic to a number of these issues and acknowledged there may be a need to address them.’ He added that people affected by the ADS had said ‘payment of the tax has been unjust and against the spirit of the legislation’.

The Law Society of Scotland has outlined a number of ‘unintended consequences’, with people being taxed unfairly – including when a couple who do not live together before they buy their new home are charged ADS if one owns another property.

Scottish Property Foundation Director David Melhuish said: ‘This is a poorly framed tax that leads to many home buyers having to reclaim thousands of pounds following a purchase where they inadvertently became subject to ADS because of the regulations.’

‘ADS is penalising hard-working taxpayers’