Property Blues? An LBTT pitfall

An American who speaks to a Brit of being dressed in his vest and pants risks conjuring up an image rather more startling than intended.

Similar care must be taken between Stamp Duty Land Tax (‘SDLT’), charged on property transactions in England and Northern Ireland, and the very similar but subtly different Land and Buildings Transaction Tax (‘LBTT’) which applies in Scotland.

An example is given by the Scottish case of Blue v Revenue Scotland [2023] FTSTC 4.

On 12 July 2019 Mr Blue sold his home and moved in with his partner Mrs Miller.

18 days later they jointly bought another home and moved into it, and Mrs Miller subsequently sold her old home.

In England there would have been no difficulty.  The higher rate of SDLT would initially have been payable on the purchase, but once Mrs Miller had sold her house, the new home would have ranked as a ‘replacement main residence’ as regards both Mr Blue and Mrs Miller (for him because he had previously sold his main residence and for her because she had subsequently sold hers) and the extra SDLT would have been repaid.

In Scotland, the rules on the higher rate – called in Scotland ‘Additional Dwelling Supplement’ (‘ADS’) – are not quite the same.  It is, as in England, charged if sale of the old home (or of all homes of joint purchasers) has not been completed by the time the new home is purchased: but the provisions for refunding on a subsequent sale are subtly different.  Under the Scottish system, the ADS charged on a purchase made by two married or cohabiting joint purchasers (such as Mr Blue and Mrs Miller) is refunded only if the subsequent sale is of a property which was the only or main residence of both purchasers.

Thus, in order to get the ADS back, Mr Blue and Mrs Miller had to show that Mrs Miller’s old home had been the only or main residence not only of Mrs Miller (which it obviously was) but also of Mr Blue.

Unfortunately, the (to our mind questionable) notion that ‘residence’ implies a degree of permanence and is not established by ‘stop-gap’ occupation is now firmly established in case law and, inevitably, Mr Blue lost the case.

The moral?  Beware: the similarity between legislation in Scotland and England (and Wales, for that matter, which has its own Land Transaction Tax) can conceal important differences.

For more information on property taxes, please get in touch with your usual BKL contact or use our enquiry form.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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