2 Mins
The Scottish Government has unveiled its Budget for 2026/27. While much of the focus is on health and social care, there are important tax changes that will affect individuals and businesses across Scotland.
Income Tax – Threshold Adjustments
Scotland’s six-band income tax structure remains in place, and the rates remain the same. The thresholds for the basic and intermediate rates will rise by 7.4%, roughly twice the rate of inflation. This means:
- Starter Rate (19%): £12,570 – £16,537
- Basic Rate (20%): £16,538 – £29,526
- Intermediate Rate (21%): £29,527 – £43,662
Higher, advanced, and top rate thresholds remain unchanged. This contrasts with the UK Government’s decision to freeze thresholds until 2031 and the 3 rates currently.
While this will tax a little more at 19% and 20% for Scottish taxpayers the difference is small. For those with an income of £50,000 in Scotland, you will pay £56.43 less tax in 2026/27 compared to 2025/26. However, with the threshold at which higher rate starts remaining frozen, and income increasing, more Scottish taxpayers will pay higher rate tax. The rates in Scotland also mean Scottish taxpayers earning over £33,535 will pay more tax than if they lived elsewhere in the UK.
Council Tax – New ‘Mansion Tax’ Bands
From 2028, two new council tax bands will apply to properties worth over £1 million. This “mansion tax” is designed to make the system fairer and reflects a long-standing commitment to reform council tax, which is still based on 1991 valuations. It was particularly affecting cities like Edinburgh. This is similar to the measure announced in the UK budget which applied to properties in England from 2028.
Land & Buildings Transaction Tax (LBTT)
- There were no changes announced to LBTT rules or rates. This means Multiple Dwellings Relief remains available, the additional dwelling supplement (ADS) remains at 8% and all rates remain the same.
Other Measures
- A new tax on private jet travel will be introduced.
- Non-domestic rates relief continues for hospitality and leisure businesses, with specific relief for island businesses.
- Support for families will increase, with the Scottish Child Payment rising to £40 per week for children under one from 2027/28.
What This Means for You
- This was a Scottish Budget with fewer changes than expected but as we are approaching a tax year end, tax planning is still important. Look out for a tax planning guide coming out soon.