Scottish Budget 2026-27

Shona Robison MSP, Cabinet Secretary for Finance and Local Government, presented her 2026-27 Budget to the Scottish Parliament on Tuesday, 13 January 2026. Key announcements included above-inflation increases to the Basic and Intermediate rate Income Tax thresholds for 2026-27, and new Council Tax bands from 1 April 2028 for residential properties valued at over £1 million. 

The Scottish Budget is usually held in December. Scotland delayed its Budget because the UK's was held later than usual, on 26 November 2025, and it allowed time to assess the implications of the UK Budget for Scotland and finalise its plans.

A final vote on the 2026-27 Budget is scheduled for 25 February 2026.

Index to sections below

• Income Tax
• Land and Buildings Transaction Tax (LBTT)
• Scottish Landfill Tax (SLfT)
• Scottish Aggregates Tax (SAT)
• Non-Domestic Rates (NDR) (Business Rates)
• Council Tax
• Air Departure Tax (ADT)
• Building Safety Levy (BSL)
• New taxes and future priorities

Income Tax

The Scottish Government does not intend to introduce any new Income Tax bands or change the rates of Income Tax.

For 2026-27, it is proposed that: 

• The Basic and Intermediate rate thresholds will increase by 7.4% to £16,538 (2025-26: £15,398) and £29,527 (2025-26: £27,492) respectively.
• The Higher, Advanced and Top rate thresholds will remain at their 2025-26 levels and will be maintained at those levels until 2028-29.

Summary of proposed 2026-27 Income Tax bands and rates:

*Assumes individuals are in receipt of the standard Personal Allowance.

**Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

Land and Buildings Transaction Tax (LBTT)

No changes were announced to LBTT rates or bands, with all being maintained at their current levels.

Other LBTT updates: 

• A comprehensive review of LBTT is underway to examine various aspects of the residential and non-residential arrangements for the tax.
  • Independent external researchers are exploring several key policy areas, including First-Time Buyer Relief and the treatment of mixed-use transactions.
• Scottish Government officials are progressing an internal LBTT review focusing on non-residential leases, measures to support investment in Scotland and the impact of the Additional Dwelling Supplement when exceptional circumstances or events happen.
  • Findings will be published before the end of this Parliamentary session.
• Legislation to provide an exemption from LBTT for transactions in Co-Ownership Authorised Contractual Scheme (CoACS) units is, subject to the approval of the Scottish Parliament, due to come into effect on 1 April 2026. 
• The Scottish Government has consulted on the case for introducing a Reserved Investor Fund (RIF) framework under LBTT, and the case for relief for the seeding of properties from existing unauthorised investment vehicles into Property Authorised Investment Funds (PAIFs), RIFs, and CoACS. 
  • The consultation highlighted a number of complexities in introducing both a RIF framework and seeding relief, requiring further detailed consideration to ensure that any LBTT amendments operate effectively.

Scottish Landfill Tax (SLfT)

For 2026-27, Scottish Landfill Tax rates will continue to align with equivalent UK rates. From 1 April 2026, the: 

• Standard rate of SLfT will increase to £130.75 per tonne (2025-26: £126.15 per tonne).
• Lower rate of SLfT will increase to £8.65 per tonne (2025-26: £4.05 per tonne).

Other SLfT updates:

• Declining SLfT revenues mean the Scottish Landfill Communities Fund (SLCF) is no longer sustainable in its current form.
  • SLCF arrangements allow landfill operators to contribute a capped share of their tax liability to community and environmental projects via the SLCF, reclaiming 90% as a tax credit.
• Following public consultation in 2025 (for which responses will be published on 15 January 2026), legislation will be introduced to close the SLCF to new contributions from 1 April 2026.
  • Prior contributions to approved bodies should enable funding for existing and new projects to continue until March 2028.
• The Scottish Government will commission independent research in 2026 to explore potential SLfT reforms, including to rate structures. This will inform whether a formal evaluation of the tax should be undertaken.

Scottish Aggregates Tax (SAT)

Assuming that the necessary outstanding legislation is approved, the SAT will be introduced on 1 April 2026.

• The 2026-27 SAT rate will align with the UK Aggregates Levy rate of £2.16 per tonne of taxable aggregate.

Non-Domestic Rates (NDR) (Business Rates)

The last revaluation took effect on 1 April 2023 with a tone date of 1 April 2022.

• The next revaluation is scheduled for 1 April 2026 with a tone date of 1 April 2025. 

Decreases to the Basic, Intermediate and Higher Property Rates have been announced for 2026-27. From 1 April 2026, rates will be:

Other NDR updates:  

• Support for businesses and communities continues in the form of: 
  • Small Business Bonus Scheme Relief.
  • Business Growth Accelerator Relief.
  • Day Nursery Relief.
  • Fresh Start Relief.
• Small Business Bonus Scheme Relief will be maintained at the existing rates and thresholds for the next three years.
• Shootings and deer forests will be excluded from eligibility for Small Business Bonus Scheme relief from 1 April 2026, except in certain circumstances. 
• All the property categories which are ineligible for the Small Business Bonus Scheme Relief will also be ineligible for Fresh Start Relief from 1 April 2026.
• From 1 April 2026, premises requiring a short-term let licence to operate will only be eligible for Small Business Bonus Scheme Relief if they have a short-term let licence.
• A 15% relief will be offered in 2026-27 and for the duration of the three-year revaluation cycle to properties in the retail, hospitality and leisure sectors, which are liable for the Basic or Intermediate Property Rate, capped at £110,000 per business per year.
• 100% relief will be extended and expanded in 2026-27 and for the duration of the three-year revaluation cycle to properties in the retail, hospitality, and leisure sectors located on islands as defined by the Islands (Scotland) Act 2018, and in three prescribed remote areas (Cape Wrath, Knoydart and Scoraig), capped at £110,000 per business per year.
• A Revaluation Transitional Relief will be introduced to protect those most affected by revaluation. Increases in gross bills up to the next revaluation in 2029 will be capped.
  • Increases in NDR gross liabilities due to revaluation will be capped at 15% (cash terms) in 2026-27 for small properties, rising in subsequent years.
• Small Business Transitional Relief will be introduced to to ensure that those ratepayers losing, on 1 April 2026, eligibility for Small Business Bonus Scheme Relief (including shootings and deer forests, but excluding those properties that require a short-term let licence but do not have one), rural relief, hospitality relief or Small Business Transitional Relief introduced for the 2023 revaluation cycle, do so in a phased manner.
  • Under Small Business Transitional Relief, eligible ratepayers will pay 25% of any increase to their net bill in the first year (2026-27), 50% in the second year (2027-28) and 75% in the third year (2028-29). 
• 100% relief will be introduced from 1 April 2026 for eligible Electric Vehicle-charging points for 10 years.
• The Scottish Government will work with businesses to examine the impact and configuration of all reliefs in advance of the next revaluation on 1 April 2029.

Council Tax

New high-value Council Tax bands will be introduced for the most expensive residential properties from 1 April 2028. Two new bands will be created above the current highest band:

• Band I for properties valued between £1 million and £2 million. 
• Band J for properties valued above £2 million.

These bands will be based on up-to-date values for those properties only, with all other homes remaining on the existing Council Tax valuation framework. 

It is anticipated that fewer than 1% of households will be affected.

Other Council Tax updates:

• The Scottish Government intends to lay regulations in January 2026 that will remove the existing legislative cap on Council Tax premiums.
  • This will enable local authorities to determine the level of Council Tax premium that applies from 1 April 2026 to second homes and long-term empty homes.
• The Scottish Government is undertaking a joint programme of engagement with COSLA and other stakeholders to consider the future of Council Tax, with the aim of building evidence and understanding around potential reforms to the whole system. 

Air Departure Tax (ADT)

ADT will become operational on 1 April 2027.

• From 1 April 2027, the existing UK-wide Air Passenger Duty (APD) will cease to apply to the carriage of passengers by air from Scottish airports.
• 2027-28 ADT rates and bands will match the UK Government’s APD rates and bands for 2027-28.
• A Private Jet Supplement within ADT will be brought forward in 2028-29.
• The Scottish Government will engage with the UK Government to seek further devolution to allow private jet ‘ghost flights’ to be addressed.

The Air Departure Tax (Scotland) Act was passed by the Scottish Parliament in 2017, but its implementation had been deferred due to concerns over whether the current Highlands and Islands exemption for the UK-wide APD (and any equivalent exemption within a devolved ADT) complied with the UK Government’s Subsidy Control regime.

• Proposals have been developed for a new Highlands and Islands exemption that allows the implementation of ADT to move forward.
• A consultation will launch by the end of January 2026 on the proposed new exemption. This will be accompanied by a programme of engagement with the aviation industry and the communities and businesses that the exemption is designed to serve.

Building Safety Levy (BSL)

The Scottish Government introduced the Building Safety Levy (Scotland) Bill to the Scottish Parliament on 05 June 2025.

• The Bill will establish a BSL in Scotland from 1 April 2028 to provide revenues to support the funding of the Scottish Government’s Cladding Remediation Programme.
  • The BSL will be equivalent to the Levy that the UK Government intends to introduce in England.
• The Scottish Government intends to publish BSL rates in June 2026.

New taxes and future priorities

Carbon Land Tax

The Scottish Government says it is committed to considering options for a Carbon Land Tax as part of regulatory and fiscal changes that could further support land reform and reduce greenhouse gas emissions from land.

• Work is being undertaken with the Scottish Land Commission (SLC) to consult with a range of stakeholders and to develop the evidence necessary to identify and assess options for future taxation in this area.
• An Interim report was published in September 2025. 

Balance of taxes across labour, income, and wealth

The Scottish Government has committed to examining the balance of taxes across labour, income, and wealth in the context of devolved powers. It notes that: 

• There is increasing international debate on balancing labour taxation with other forms of income and wealth, including land and property taxation, to develop tax systems that are more resilient and provide a broader set of fiscal tools to respond to economic shocks and future fiscal challenges.
• It will explore what wealth taxation could look like for Scotland, understanding the opportunities and challenges it may offer the tax system and the steps that would be needed to progress options.

External link

Scottish Government: Scottish Budget 2026 to 2027