Thank you, convener. I aim to keep my opening remarks brief.
An additional dwelling supplement liability arises when a buyer purchases an additional dwelling in Scotland and at the end of the effective date of that transaction, when mortgage funds are cleared and keys are handed over, the buyer owns two or more dwellings and is not replacing their main dwelling. In the context of the additional dwelling supplement legislation, “replacing” means selling the previous main residence and buying a new main residence.
For the purposes of the additional dwelling supplement legislation, the Scottish Government’s policy is that a couple—by which I mean a married couple, cohabitants and civil partners—is treated as one economic unit. That is to address the risk of properties being moved between individuals for the purpose of tax avoidance.
It is also the Scottish Government’s policy intention that, when the additional dwelling supplement is paid, it can be reclaimed when a main dwelling is being replaced and the sale of the former main dwelling occurs within 18 months of the purchase of what becomes the current main dwelling.
As the additional dwelling supplement has become embedded, it has become clear that, in practice, the legislation has not worked as intended in relation to couples. Demonstrating that the Scottish Government is listening to taxpayers, the order before the committee this morning amends the legislation to address that issue for cases going forward. It does so in two respects. First, the order amends the current legislation to provide relief from additional dwelling second homes tax when couples jointly buy a dwelling-house but the dwelling-house being replaced is owned by only one of them.
The second legislative amendment provides for the scenario when the transaction for disposal of the former main dwelling owned by one of the couple is concluded after the transaction for the joint acquisition of the new main dwelling. In short, the amendment will allow for a repayment of tax paid to the couple if the disposal happens within 18 months of the joint purchase of the new main dwelling.
I am happy to answer any questions that members may have.