A Ukrainian woman who fled to Scotland after Russia’s invasion has been told she could face a £9,000 property tax charge because she still owns a flat in Kyiv, forcing her and her Scottish partner to withdraw an offer on a house in North Ayrshire.
Kateryna Stepanovych, 38, bought the small flat in Kyiv in 2018, before Russia’s invasion. She fled the war zone in 2023. She and her partner, Mattias Lindgren, discovered the potential charge when they reviewed the paperwork for a property they hoped to buy. Revenue Scotland’s rules can see house buyers facing an additional 8% Additional Dwelling Supplement (ADS) charge if they already own another property, including overseas homes. The supplement was introduced by the Scottish government primarily to target people buying second or buy-to-let homes.
Lib Dem MSP Liam McArthur, who represents Orkney where the couple currently live, raised the case in the Scottish Parliament on Tuesday. He asked First Minister John Swinney whether he agreed the rule was not intended for such a situation. Swinney said he could understand why the rules had created the situation and would ask Revenue Scotland to investigate.
Previously, McArthur had contacted Deputy First Minister Jenny Gilruth. She responded in a letter that there were “no provisions within the legislation that allow either the Scottish government or Revenue Scotland to disapply ADS on a discretionary or case-by-case basis.”
“Why should we be punished with this tax for a property that’s in a war zone?” Mattias asked. Kateryna, who works in a factory, said the process was particularly difficult as English is not her first language. The couple are now considering renting while postponing their plans to buy.
Analysis
Why This Matters
- The case highlights the rigid application of devolved tax policies, where the Additional Dwelling Supplement makes no exception for properties in conflict zones or those inaccessible to the owner.
- It illustrates a practical barrier faced by Ukrainian refugees in Scotland who retain assets in Ukraine, complicating efforts to establish permanent housing.
- The outcome of Revenue Scotland’s investigation may test the limits of the Scottish government's willingness to offer discretionary relief in exceptional circumstances.
Background
The Additional Dwelling Supplement (ADS) is a charge under Scotland’s Land and Buildings Transaction Tax. It stands at 8% and was designed to cool the housing market by penalizing the purchase of second homes and buy-to-let properties. The legislation currently contains no provisions for waiving the charge on grounds of personal hardship or the condition or location of the overseas property.
Key Perspectives
Kateryna Stepanovych and Mattias Lindgren: Argue they are being unfairly penalized for owning a flat in Kyiv that they cannot use or easily sell, a situation they say could not have been the tax’s intended target.
First Minister John Swinney: Acknowledged the couple’s difficult position and has asked Revenue Scotland to look into the case, though the Deputy First Minister’s letter previously noted the law offers no discretionary powers.
Liam McArthur MSP: Raised the case in the chamber, suggesting the application of the ADS in this instance is a clear departure from the purpose of the tax.
What to Watch
- Revenue Scotland’s response to the First Minister’s request for an investigation, which could clarify whether the rules can be relaxed.
- Whether MSPs seek an amendment to the ADS legislation to introduce a hardship or exceptional circumstances exemption.
- The couple’s immediate housing situation, as they consider the rental market while their purchase plans are on hold.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedThe couple could face a £9,000 property tax charge over Kateryna’s Kyiv flat under Scottish rules.BBC Scotland: “A Ukrainian woman who fled to Scotland after Russia invaded her homeland has been told she could face a £9,000 property tax charge because she still owns a flat in Kyiv.”
- SupportedThe couple’s case was raised in the Scottish Parliament over a potential Additional Dwelling Supplement charge.BBC Scotland: “The couple's case was raised in the Scottish Parliament by Liam McArthur”
- SupportedKateryna was told she could face the charge because she still owns a flat in Kyiv.BBC Scotland: “A Ukrainian woman who fled to Scotland after Russia invaded her homeland has been told she could face a £9,000 property tax charge because she still owns a flat in Kyiv.”
- SupportedThe potential charge led Kateryna and her partner to withdraw their offer on a house in North Ayrshire.BBC Scotland: “Unable to afford the additional cost, they had to withdraw their offer.”
- SupportedKateryna discovered the potential charge while she and Mattias were trying to buy a house in North Ayrshire.BBC Scotland: “Kateryna Stepanovych, 38, discovered the potential charge when she tried to buy a house in North Ayrshire with her Scottish partner Mattias Lindgren.”
- SupportedThe couple became aware of the charge when Mattias looked through the solicitor’s paperwork after they made an offer.BBC Scotland: “The couple, who currently live in Stromness in Orkney, only became aware of the £9,000 charge when they put down an offer on the property they were planning to buy and Mattias looked through the paperwork from their solicitor.”
- SupportedRevenue Scotland’s rules can impose an additional 8% ADS charge on buyers who already own another property, including overseas.BBC Scotland: “Under Revenue Scotland's rules, the Additional Dwelling Supplement Charge can see house buyers facing an additional 8% charge if they already own another property, including overseas.”
- SupportedThe Scottish government introduced ADS primarily to target people buying second or buy-to-let homes.BBC Scotland: “It was introduced by the Scottish government primarily to target people who are buying second or buy-to-let homes”
- SupportedLiam McArthur, an Orkney MSP, raised the case in Parliament on Tuesday and asked John Swinney whether the tax was intended for this situation.BBC Scotland: “Lib Dem MSP McArthur raised the couple's case in the Scottish Parliament on Tuesday, when he asked First Minister John Swinney whether he "agrees with me that this is surely not the intended purpose of the tax?"”
- SupportedSwinney said he understood why the rules had created the situation and would ask Revenue Scotland to investigate.BBC Scotland: “Swinney said he would ask Revenue Scotland to investigate the case, adding that he could understand why the rules had created the situation the couple were facing.”
- SupportedJenny Gilruth’s letter said there were no provisions allowing the government or Revenue Scotland to waive ADS at their discretion or case by case.BBC Scotland: ““no provisions within the legislation that allow either the Scottish government or Revenue Scotland to disapply ADS on a discretionary or case-by-case basis.””
- SupportedMattias asked, “Why should we be punished with this tax for a property that’s in a war zone?”BBC Scotland: “Mattias said: "Why should we be punished with this tax for a property that's in a war zone?"”