Scotland’s property taxes hit record highs

Scotland’s property taxes have reached record highs of £714.9 million, increasing by 18.2% over the 12 months from August 2024 to July 2025.

That’s according to DJ Alexander, Scotland’s largest letting and estate agent, almost a third of this total, £221.3m (30.9%), came from the Additional Dwelling Supplement (ADS), which is paid by second homeowners and property investors.

The Scottish government announced in last year’s Budget that the Additional Dwelling Supplement (ADS) would rise from 6% to 8%.

The ADS, introduced in April 2016, applies to transactions involving the purchase of an additional residential dwelling over £40,000, including buy-to-let investments and second homes.

High levels of taxable income for the Scottish government

David Alexander, the chief executive officer of DJ Alexander Scotland, said: “The tax take from Scottish homebuyers continues to reach higher and higher levels with a record £80.3m in one month. To put this into perspective this is £12.2m higher than the figure for June.

“That almost a third of this, a total of £221.3m, comes from landlords and second home buyers indicates just how crucial this group is in maintaining high levels of taxable income for the Scottish government.”

According to DJ Alexander, Scottish government revenues from Land and Buildings Transaction Tax (LBTT) increased by 18.2% over the previous 12 months from August 2024 to July 2025.

The total residential taxes collected for July 2025 alone were the highest ever at £80.3 million with a record £52.3 million from homebuyers and £28.0 million from the additional dwelling supplement (ADS).

This is £110.0m higher than the previous period between August 2023 and July 2024 when £604.2m was raised.

Of the £714.9 million taxes raised £221.3 million were from the ADS which is 30.9% of the total raised and is £59.5 million higher than the previous 12-month period.

Almost all the residential taxes raised arose from properties sold for more than £325,001. The 19,560 transactions above this threshold collected £388.8 million which is 78.9% of the total £493.0 million raised in LBTT (this is the figure for residential sales with the ADS figures removed). This means that the average tax levied per transaction was £19,877.

Highly economically damaging tax even worse

Mr Alexander adds: “Despite increasing taxation on this group from 6 to 8% last year there still seems to be an appetite to buy. The increase in the level of taxation by 2% can only partially explain a tax take which has gone up by £59.5 million in one year.”

“But it must be questionable whether this is a sustainable, or even sensible, means of raising revenue.”

Earlier this year, the Institute for Fiscal Studies (IFS) criticised the policy in its report Assessing Scottish tax strategy and policy, warning that Scotland’s ADS increase “makes an already highly economically damaging tax even worse.”

He adds: “The IFS, and many private investors, understands that the current LBTT policy is simply political posturing which makes little or no economic sense but plays up to the idea that punishing ‘the rich’ is the way forward.

“The fact that those defined as being rich are anyone buying a property valued at over £325,000 highlights the factual emptiness of this policy and does little to address the current housing issues in Scotland.”