Additional Dwelling Supplement (ADS) rate rises
The ADS is an additional charge added to any Land and Buildings Transaction Tax (LBTT) which may be due. It is charged if someone buys an additional residential property in Scotland, such as a second home, a rental property, or a holiday home.
With huge demand for private rented property and long-term rent control measures contained in the Housing Bill, the Scottish Government’s decision to raise ADS from 6% to 8% is out of touch with the housing needs of Scotland.
Funding for affordable homes
Announced under the banner of ending child poverty, an additional investment of £768m for the Affordable Housing Supply Programme will enable over 8,000 new properties for social rent, mid-market rent and low-cost home ownership to be built or acquired over the next year, contributing the Scottish Government’s target of 110,000 affordable homes by 2032.
Support for businesses
As well as providing £62m of high street regeneration funding, the Budget aims to support businesses by freezing the Basic Property Rate (BPR) at 49.8p. The Small Business Bonus Scheme will also be maintained, and together these measures will protect over 200,000 small properties.
Hospitality premises liable for the BPR will also benefit in 2025-2026 from 40% non‑domestic rates relief, capped at £110,000 per business. Hospitality premises located on islands and specified remote areas will continue to get 100% non‑domestic rates relief.
Taxation and benefits
There will be no new bands or increases in the rates of Scottish income tax for the remainder of this parliament, and the basic and intermediate thresholds will increase by 3.5% meaning most taxpayers in Scotland will continue to pay less income tax than the rest of the UK. Furthermore, all benefits will be uprated in line with September 2024 CPI inflation.
Potentially, less good news is that councils will have the right to put up council tax by as much as they feel necessary next year. Although Robison stated there was no reason for large increases, Perth and Kinross councils are already considering rises of 10%.
Tackling climate change
£25m will be allocated to support the creation of new jobs in the green energy supply chain, and £300m will be invested in the Heat in Buildings Programme, maintaining 2024‑25 funding levels. This will accelerate energy efficiency upgrades in homes and businesses across the country.
With the huge demand for private rented property and long-term rent control measures contained in the Housing Bill, the Scottish Government’s decision to raise Additional Dwelling Supplement under Land and Buildings Transaction Tax from six to eight per cent is quite simply wrong and out of touch with the housing needs of Scotland.
Ultimately with tenancy rent caps planned and impending minimum energy efficiency rules for private rented property, raising yet more taxes on the private rented sector will do nothing to tackle the housing emergency and only raise rents further and put the burden of these costs on tenants.
