Scottish Budget 2026-27

Income tax bands  

The Scottish Government announced above inflation increases to the basic and intermediate bands of 7.4%. Higher, advanced and top rate thresholds remain frozen and the personal allowance and savings and dividend rates are set by the UK Government. The proposed new rates and bands are below for comparison: 

  2025/26   2026/27  
  Band Rate Band Rate
Starter £12,571*- £15,397 19% £12,570 - £16,537 19%
Basic £15,398 - £27,491 20% £16,538 - £29,526 20%
Intermediate £27,492 - £43,662 21% £29,527 - £43,662  21%
Higher £43,663 - £75,000 42% £43,663 - £75,000  42%
Advanced £75,001 - £125,140**  45% £75,001 - £125,140  45%
Top Over £125,140 48% Over £125,140  48%

*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.  

Non-domestic rates (business rates)  

Small Business Bonus Scheme  

This relief is staying in place for a further three years. Shootings and deer forests will be excluded from the relief from 1st April 2026, subject to a few limited exceptions. Existing exclusions e.g. payday lenders, car parks and betting shops remain in place. 

Retail, hospitality and leisure premises  

A 15% relief against non-domestic rates is available for the next three years for those on basic or intermediate property rates. This relief is capped at £110,000 per year. The Scottish government awaits further announcements from the UK government on support for pubs. 

There will be 100% relief for retail, hospitality and leisure premises on Islands* and in Cape Wrath, Knoydart and Scoraig. 

*As defined by the Islands (Scotland) Act 2018 

Property taxes

Council Tax

A new ‘mansion tax’ on higher valued domestic properties was also proposed. This will be achieved by a revaluation of certain residential properties, targeting houses worth more than £1m. It is understood this will be achieved by reassessing properties in the current top two bands and then creating two new bands. 

Land and Buildings Transaction Tax – no change 

No changes to Land and Buildings Transaction Tax, the Additional Dwelling Supplement or First Time Buyer Relief. However, a review of LBTT is underway as well as a review of non-residential leases and the impact of ADS. 

Transport taxes 

Air Departure Tax (ADT) begins on 1st April 2027 and will replace the UK wide Air Passenger Duty (APD) in Scotland. A private jet supplement will be added in 2028/29 which means that higher rates of tax will be paid by those who choose to travel on private jets. 

The Scottish and UK governments are working on creating exemptions to ADT for Highlands and Islands flights to Scottish and other UK airports but plan to remove existing APD exemptions for international flights from the Highlands and Islands.  

Scottish Landfill Tax 

Scottish Landfill Tax (SLfT) will increase from 1st April 2026 to align with the equivalent UK tax, UK Landfill Tax.  

Scottish Aggregates Tax  

This new tax will begin on 1st April 2026 at £2.16 per tonne and will be aligned with UK Aggregates Levy for Year 1. Previously Scottish taxpayers were subject to the UK Aggregates Levy. 

Keep up to date with future announcements  

Members of the Scottish Parliament will vote on the Budget bill in the coming months and whether the items proposed in this Budget will be passed remains to be seen. You can get further detail on the Scottish Government’s proposals here.  

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Last updated: 13th January 2026