Additional Dwelling Supplement (ADS) was introduced in 2016 and, in economic terms, has been very successful. In the first year alone it raised £75.9 million. Dubbed the ‘second home tax’ there have been some consequences – intentional or otherwise – that mean that some fall foul of the rules even though they are not purchasing a second property to let out or use as a holiday home. The Government has now passed various amendments to help rectify situation that could be seen as illogical.

  1. Extension to time limits

The previous limit of 18 months for reselling a main residence when you have already purchased a new main residence, has been extended to 36 months.  This means that if you purchase a second home, but have not yet sold your main home you now have an additional 18 months to sell it. Similarly the requirement to have lived in the main residence at some point in the 18 months prior to purchase of a new main residence is relaxed to 36 months.

2. Changes for separating spouses and civil partners

Under the old rules, where spouses or civil partners were separating they must have lived in the previous main residence in the 18 months preceding the purchase of a new main residence. This caused frustrations with parties being unable to move on where financial matters had not been finalised. Now the law has changed so that there is no time limit provided that there is a Minute of Agreement or Court decree in relation to the matrimonial home. This raises concerns that separating spouses and civil partners could hold each other to ransom, but on balance does improve upon the previous law. It is important to note that this only applies to spouses and civil partners and not to co-habiting couples.

3. Co-purchasers who both own and live in individual properties prior to purchase

Prior to 1st April,  where two parties lived in individual properties that they owned separately and they wished to purchase together both either needed to sell before purchasing (therefore avoiding ADS altogether), or both sell within 18 months and be entitled to claim back the ADS after the sale of both. Now couples will now be able to dispose of one of the properties prior to their joint purchase and one after (within 36 months) and be able to reclaim the ADS.

The new rules do make an attempt to make the tax liability fairer, although in remains to be seen whether this will be the case in reality. The rules are still very complex and it is important to discuss any potential ADS liability as soon as possible in a residential transaction. Our team of experienced solicitors are here to help, please find us at

Author(s): Anne Littlejohn

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