Why a flat in Kyiv can add tax to a home purchase in Scotland

A flat left behind in Kyiv has become an obstacle to buying a home in North Ayrshire. Kateryna Stepanovych and her partner, Mattias Lindgren, withdrew their offer after learning they could face an additional £9,000 tax charge, according to BBC Scotland’s November 8 report, carried by AOL. They said they could not afford the extra cost.

Stepanovych bought the Kyiv flat in 2018 and fled Ukraine in 2023. The BBC reported that shrapnel had damaged her apartment building’s exterior, although her own flat remained undamaged. The couple now live in Orkney. Their £9,000 was a potential cost of proceeding with the Scottish purchase; the report does not establish that they paid it.

The charge is Scotland’s Additional Dwelling Supplement, usually shortened to ADS. It is paid alongside Land and Buildings Transaction Tax. Understanding the dispute means separating three questions: what purchase attracts the charge, which existing properties count, and whether the conditions for an exception or repayment are met.

The transaction at issue is the Scottish home purchase. When ADS applies, its rate is generally 8% of that purchase price, as Revenue Scotland’s official guidance explains. It is not an annual 8% tax on the Kyiv flat. For illustration, a £150,000 purchase subject to the supplement would attract £12,000 in ADS: £150,000 multiplied by 0.08. That example is not the couple’s reported purchase price.

For an ordinary individual purchase, the ownership test looks at whether a buyer has two or more qualifying dwellings at the end of the transaction’s effective date—usually completion—and whether they are replacing their main residence. That means a person’s first home purchase in Scotland can still engage the additional-property rules. Revenue Scotland sets out that test here.

Overseas homes count, but ownership alone is not the whole assessment. The guidance uses a £40,000 market-value threshold, with rules covering ownership shares for transactions from April 2024. Valuation must be a reasonable estimate at the transaction’s effective date, supported by evidence. The reporting does not establish the Kyiv flat’s value for that purpose. The valuation rules are published alongside the ownership definitions.

Buying together also matters. One joint buyer’s qualifying ownership of another home can bring the transaction within ADS even if the other buyer has never owned property. Revenue Scotland’s joint-buyer guidance illustrates that situation.

Replacing a main residence has a particular legal meaning, too. Simply leaving rented accommodation does not amount to disposing of an owned home. A qualifying replacement can avoid ADS. For purchases with an effective date on or after April 1, 2024, disposing of a qualifying previous main home within the 36-month period beginning the day after the purchase’s effective date can permit repayment, subject to residence and joint-buyer conditions. That is the qualifying disposal window, not a general deadline for submitting a repayment claim. Those conditions need to be established before assuming this couple qualifies. Revenue Scotland explains the repayment requirements.

The political response preceded the BBC report. In the Scottish Parliament’s official record of the November 3 exchange, Liberal Democrat MSP Liam McArthur raised the case. First Minister John Swinney agreed that the circumstances described were outside the supplement’s intended purpose and said he would ask Revenue Scotland to examine the details.

The BBC also reported an earlier ministerial letter saying the legislation gave neither ministers nor Revenue Scotland discretion to waive ADS case by case. Applying an existing exception is different from granting a discretionary waiver. Swinney’s response announced an examination, without promising an exemption or changing the rules. Neither the parliamentary record nor the BBC’s November 8 report establishes the outcome of that examination.