Additional Dwelling Supplement (ADS) increase legislation: FOI release

Information requested

Information relating to subordinate legislation to amend the rate of the Additional Dwelling Supplement (ADS) payable from 6% to 8%, with effect from 5 December 2025. In particular, for a period dating back to 1 January 2021:

(i) What work has been done by the Scottish Government to evaluate what the impact of this policy would be? Has any work in particular been done to assess the impact of this policy on the supply of private rental housing units and the supply of newly constructed housing? Please provide copies of any relevant documentation.

(ii) For a timeline of events/work relevant to the formation of this proposed subordinate legislation and its adoption as Scottish Government policy. This should include a date when decision to increase LBTT was made, when reports, consultations and investigations relating to this change were commissioned, performed and finished, and when the wording and details of the change were finalised.

(iii) For copies of all previous drafts of this subordinate legislation.

Response

I enclose a copy of some of the information you requested.

On (i) some of the information you have requested, in relation to the policy evaluation, is available from the Scottish Fiscal Commission who have responsibility for forecasting the financial impact of Scottish Government policies. An assessment of the effect of this particular policy on tax revenue is included in its December 2024 Economic and Fiscal Forecast at paragraphs 4.103 to 4.105 with further detail in Annex A of that publication at paragraphs A.51 to A.63, and in the Supplementary tax figures.

In addition, the policy note published alongside the legislation introduced to the Scottish Parliament includes commentary on impact assessments. This is available on legislation.gov.uk. 

On (ii) a timeline of events/work relevant to the formation of this proposed subordinate legislation and its adoption as Scottish Government policy is set out below:

• November 2024 - The effect of increasing the rate of ADS on tax revenue was assessed by the Scottish Fiscal Commission as part of the Scottish Budget 2025-26 process.
• 26 November 2024 – Ministerial decision to increase the rate of the ADS from 6% to 8%.
• Late November – early December 2024 - the draft SSI was drafted and agreed by the Cabinet Secretary for Finance and Local Government.

On (iii) some of the information you have requested, in respect of draft copies of this subordinate legislation, is available on legislation.gov.uk. I can confirm that no other draft Scottish Statutory Instruments were prepared in relation to this policy.

Under section 25(1) of FOISA, we do not have to give you information which is already reasonably accessible to you. If, however, you do not have internet access to obtain this information from the websites listed, then please contact me again and I will send you a paper copy.

While our aim is to provide information whenever possible, in this instance the Scottish Government does not have some of the information you have requested. This relates specifically to your queries around (i) whether work has been done on the impact of the policy on the supply of private rental housing units and the supply of newly constructed housing and (ii) when a consultation was commissioned in respect of this policy.

On the first of these, the Scottish Fiscal Commission’s published forecasts do not include any disaggregated analysis of the impact of the policy on either the private rented sector or newly constructed housing. In addition, the Scottish Government has not separately undertaken any specific analysis on this.

However, in case helpful, S4.20A of the supplementary figures published by the Scottish Fiscal Commission includes a forecast of the effect of the ADS increase on overall residential transactions. S4.20 in this document also provides a pre-measures forecast related to the housing market for the period to 2029-30. This includes a number of fields, including residential property transactions, private new build starts and completions, and total dwelling stock.

In respect of (ii) no consultation was commissioned in respect of this amendment. This is because Budget related measures are considered tax sensitive and therefore not shared publicly until they are announced at Budget. As reflected in the policy note published alongside the legislation on legislation.gov.uk, there is also no statutory duty to consult on such measures.

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