Inevitably with the limited tax powers the Scottish Government has the impact is far less wide ranging than the UK Budget, but it does still impact all Scottish taxpayers in some way.
The timing of this year’s Scottish Budget announcement was later than usual because of the UK Chancellor’s decision to delay her Autumn Budget until 26 November 2025. Despite its unwelcome timing, particularly for tax advisers completing tax returns for clients this month, the UK Budget did contain some good news for the Scottish Government (but not its taxpayers) as it is projected to raise an additional £26.6 billion of taxes by 2030/31, which had a knock-on improvement to the payments made to the Scottish government.
Westminster’s plan to abolish the two-child benefit cap from April 2026 was also a boost to Scottish finances because the Scottish Government was able to drop its own plans for a Two-Child Limit Payment, projected to cost £155 million in the coming year.
This Budget was Shona Robison’s third and final as Finance Secretary. Like many before, it did little to ease the burden of Scottish taxpayers although there were changes in lower rate band thresholds. However, the freezing of the other tax thresholds will inevitably result in more Scottish taxpayers being subtly drawn into higher tax rate brackets.
Following, the UK Chancellor’s example, there was a headline announcement on a form of mansion tax for properties worth over £! Million through the creation of 2 new Council Tax bands, albeit this is likely to impact very few properties.
Breakfast Clubs and Swimming lessons were thrown into the mix for primary school pupils, but no action taken to deliver the promise from the last election by the SNP of an extra 3,500 teachers by the end of the Parliament.
Income Tax
The structure of Scottish income tax will be little changed in 2026/27:
|
Scottish taxpayers – non-dividend, non-savings income |
2026/27 |
2025/26 |
||
|
Tax Rate |
|
Tax Rate |
|
|
|
Starter rate on taxable income up to |
19% |
£3,967 |
19% |
£2,827 |
|
Basic rate on next slice up to |
20% |
£16,956 |
20% |
£14,921 |
|
Intermediate rate on next slice up to |
21% |
£31,092 |
21% |
£31,092 |
|
Higher rate on next slice up to |
42% |
£62,430 |
42% |
£62,430 |
|
Advanced rate on next slice up to |
45% |
£125,140 |
45% |
£125,140 |
|
Top rate on income over |
48% |
£125,140 |
48% |
£125,140 |
No changes were announced to the rates of tax on property income. However, the UK Finance (No 2) Bill contains provisions to allow Scotland to set its own rate, with this power coming into effect in 2027/28.
Land and Buildings Transaction Tax (LBTT)
LBTT rates will remain unchanged for 2026/27. A comprehensive review of LBTT was announced in the Scottish Budget 2025/26 and is now underway, with results set to be published before the end of the current parliamentary session.
|
Land and buildings transaction tax (LBTT) on slices of value from 5 December 2024 |
|||
|
Residential property |
% |
Commercial property |
% |
|
Up to £145,000 |
0 |
Up to £150,000 |
0 |
|
£145,001 – £250,000 |
2 |
£150,001 – £250,000 |
1 |
|
£250,001 – £325,000 |
5 |
Over £250,000 |
5 |
|
£325,001 – £750,000 |
10 |
|
|
|
Over £750,000 |
12 |
|
|
|
First-time buyers: 0% on first £175,000 Additional residential and all corporate residential properties £40,000 or more: add 8% to rates |
|||
Council Tax Bands
From April 2028 the number of Scottish council tax bands will be increased from eight to ten. The new bands will be:
These bands will be based on up-to-date values for properties currently in bands G and H, with all other homes remaining on the existing Council Tax valuation framework. The level of tax to be applied to these properties is subject to policy development.
Regulations will be introduced imminently which, subject to Parliamentary approval, will remove the existing legislative cap on Council Tax premiums. The change would allow local authorities to determine the level of Council Tax premium that applies from 1 April 2026 to second homes and long-term empty homes.
Robison also announced a 2% real terms increase for local government funding, saying that she hoped this would prompt councils to make “reasonable decisions on council tax”.
Scottish Non-Domestic Rates (NDR)
The next revaluation for business properties takes effect from 1 April 2026, based on values as at 1 April 2025. For 2026/27 the NDR rates will be
|
Category |
Rate |
|
Basic Property Rate for properties with a rateable value up to and including £51,000 (‘poundage’) |
48.1p |
|
Intermediate Property Rate for properties with a rateable value between £51,001 and £100,000 |
53.5p |
|
Higher Property Rate for properties with a rateable value above £100,000 |
54.8p |
As controversially happened in England, while the pence per £ rate has fallen, the overall NDR payment may increase due to valuation changes and the impact of any reliefs available.
The Small Business Bonus Scheme (SBBS) relief will be maintained at the existing rates and thresholds for the next three years. From 1 April 2026, shooting estates and deer forests will be excluded from eligibility for SBBS relief, except for:
Also from 1 April 2026, those premises requiring a short-term let licence to operate will only be eligible for SBBS relief if they have a short-term let licence.
A 15% relief for 2026/27 and the following two years will be offered to properties in the retail, hospitality, and leisure sectors liable for the basic or intermediate property rate, capped at £110,000 per business per year.
100% relief will continue to apply in 2026/27 through to 2028/29 for hospitality businesses located on islands as defined by the Islands (Scotland) Act 2018 and in three prescribed remote areas (capped at £110,000 per business per year).
A revaluation transitional relief will be introduced, capping increases in gross bills up to the next revaluation in 2029. This begins with a 15% cash terms cap for small properties in 2026/27:
|
Category/rateable value |
Transitional Relief Cap |
||
|
2026/27 |
2027/28 |
2028/29 |
|
|
Small – up to £20,000 |
15% |
22% |
38% |
|
Medium – £20,001 to £100,000 |
30% |
44% |
75% |
|
Large – over £100,000 |
50% |
75% |
113% |
A new small business transitional relief (SBTR) will be introduced from 1 April 2026 for those ratepayers losing eligibility for SBBS relief (including shooting estates and deer forests but excluding those properties that require a short-term let licence but do not have one), rural relief, hospitality relief or the former SBTR introduced for the 2023 revaluation cycle.
Under the new SBTR, eligible ratepayers will pay 25% of any increase to their net bill in the 2026/27, rising to 50% in 2027/28 and 75% in 2028/29.
Scottish Landfill Tax
The standard rate of Scottish landfill tax will increase from £126.15 a tonne to £130.75 a tonne and the lower rate from £4.05 a tonne to £8.65 a tonne from 1 April 2026, in line with the changes made in the UK Autumn Budget.
