A company buying a dwelling in Scotland for £40,000 or more pays the Additional Dwelling Supplement on top of LBTT on every purchase, including its very first, because a company can never be replacing a main residence. For contracts entered into from 5 December 2024 the supplement is 8% of the whole price. The main routes out are buying six or more dwellings in one transaction, a purchase that is non residential, or a specific LBTT relief that also reduces the supplement.

Why does a company pay the supplement on its first home?

For individuals, the supplement is a test of how many dwellings the buyer owns at the end of the effective date and whether a main residence is being replaced. Companies are taken outside that test altogether. Revenue Scotland’s technical guidance at LBTT10017 states that “a non individual is not regarded as replacing their only or main residence”, so the supplement applies to every purchase of a dwelling in Scotland by a non individual, other than certain trust transactions. The rules are in Schedule 2A to the Land and Buildings Transaction Tax (Scotland) Act 2013.

LBTT10017 sets the conditions. The transaction consists of or includes the purchase of a dwelling in Scotland, the chargeable consideration is £40,000 or more, and the buyer is not an individual. Non individuals include companies, investment trusts and any other corporate entity. Revenue Scotland’s own example is Orange Limited, which rents its premises and buys one flat to let: it owns only one dwelling, but the supplement applies.

Individuals caught by the same rule

The company treatment also extends to:

  • an individual buying as a sole trader or partner in a business whose sole or main activity is investing or dealing in property, including property outside Scotland;
  • an individual buying as trustee of a settlement where no beneficiary is entitled to occupy the dwelling for life or to its income.

So operating through a company is not the only trigger. A landlord whose letting business is run as a partnership can be in the same position.

How much is the supplement and which rate applies?

Transactions Supplement rate
Before 25 January 2019 3%
On or after 25 January 2019 4%
On or after 16 December 2022 6%
On or after 5 December 2024 8%

The rate is a flat percentage of the whole price, not a slice above a threshold. Where the contract was entered into on or before 4 December 2024, the 6% rate still applies even if settlement was later. The supplement is calculated with the LBTT, included on the same return and paid at the same time, within the 30 day window explained in LBTT returns and deadlines.

The 36 month repayment route described in the LBTT Additional Dwelling Supplement depends on the buyer selling a previous only or main residence and living in the new one. A company has no main residence, so in practice that route is not open to it.

What if a director buys jointly with the company?

Joint buying does not help. Where one of the joint buyers is a non individual, the supplement applies automatically and the replacement of main residence rules do not apply. Revenue Scotland’s example has Orange Limited buying a flat jointly with Blue, who owns nothing: the supplement is due, and Blue is jointly responsible for paying it. Because joint buyers are jointly and severally liable, a director who signs as a co purchaser takes on personal liability for the supplement.

One exception runs the other way. The supplement does not apply where a buyer, individual or company, acquires a further share of a property it already jointly owns, although LBTT may still be due on any consideration, including debt taken over.

Which exemptions and reliefs are available?

Consideration under £40,000

The company conditions only bite where the chargeable consideration is £40,000 or more.

Six or more dwellings in one transaction

Where six or more separate dwellings are the subject of a single transaction, they are treated as non residential under section 59(8), and Revenue Scotland gives 100% relief from the supplement. Its example is Red Limited buying a house divided into eight flats in one transaction: LBTT is due at non residential rates, but no supplement. The guidance warns that the relief would not have been available had the eight flats been bought in two transactions, neither of which included six dwellings. Multiple dwellings relief can still be applied, and where it is claimed alongside the supplement the calculation is done dwelling by dwelling.

Non residential and mixed purchases

The supplement is not applied to non residential transactions. In a mixed purchase, such as licensed premises with a flat above, the supplement is charged at 8% on the part of the price attributable to the flat on a just and reasonable apportionment, and only if that part on its own is £40,000 or more. The LBTT on the whole price uses the non residential bands explained in LBTT on commercial property.

Gifts and LBTT reliefs

A transfer exempt from LBTT, such as a gift for no consideration, carries no supplement. Revenue Scotland also lists LBTT reliefs that apply to additional dwellings, including relief for house builders taking a home in part exchange, certain transactions by social landlords and certain purchases by local authorities. Where LBTT relief is partial, the supplement is reduced in the same proportion.

What does this cost in practice?

Illustration only. Glen Lettings Ltd buys a flat for £180,000. LBTT at residential rates is 0% on the first £145,000 and 2% on the next £35,000, which is £700. The supplement is 8% of £180,000, which is £14,400. The company pays £15,100, more than 8% of the price.

Illustration only. The same company instead buys a block of six flats for £1,080,000 in one transaction. The purchase is treated as non residential: £1,000 on the slice from £150,001 to £250,000 plus 5% of £830,000, which is £41,500, a total of £42,500, with relief from the supplement. Had the six flats been bought one at a time at £180,000 each, the supplement alone would have been £14,400 on each purchase, £86,400 in total, before any LBTT. Whether separate purchases from the same seller are linked transactions is a separate question.

How does Scotland compare with England and Wales?

Companies face extra charges in all three nations, built differently. In England and Northern Ireland, companies pay a 5% SDLT surcharge on residential property and, on residential property costing more than £500,000, certain corporate buyers pay 17% unless a relief applies, as explained in SDLT for companies buying high value homes. In Wales, companies pay the LTT higher rates on residential property unless it is subject to a lease with more than 21 years left, covered in LTT higher residential rates.

Scottish property also remains within ATED, which is a UK tax. A company holding a Scottish dwelling valued at more than £500,000 must deal with ATED each year, usually by filing ATED relief declarations where the property is let commercially.

What mistakes come up most often?

  • Assuming a company’s first dwelling is free of the supplement.
  • Adding a director as joint buyer in the hope of avoiding it.
  • Splitting a portfolio purchase into batches of fewer than six dwellings.
  • Applying the supplement to the whole price of a mixed purchase rather than the flat.
  • Using the old 6% rate without evidence that the contract predates 5 December 2024.
  • Expecting a refund when a company property is later sold.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.