Scottish Budget 2026/27 – What it could mean for you
Scotland’s 2026/27 Budget introduces new council tax bands for £1m+ homes and updates income tax thresholds, with most lower and mid‑income earners set to pay slightly less. Read on to see how these changes could affect your take‑home pay, property costs and financial plans.
The Scottish Government has announced its Budget for the 2026/27 tax year. Several changes were introduced that may affect households across Scotland, particularly those who own higher‑value property or earn above the higher tax thresholds.
Below is a simple summary of the key points and what they might mean for you.
Two new council tax bands for homes worth over £1 million
From April 2028, the Government plans to introduce two new council tax bands for the most expensive properties in Scotland.
- Homes valued at over £1 million will fall into new, higher council tax bands.
- Band I will apply for homes valued between £1 million and £2 million
- Band J for properties valued above £2 million
- These bills will be based on an up‑to‑date property valuation.
What this means for you:
If your home is valued above £1 million, you may see an increase in your annual council tax bill from April 2028.
Changes to income tax thresholds
The Government also announced changes to income tax thresholds:
- The basic and intermediate rate thresholds will rise by 7.4% from the start of the 2026/27 tax year.
- The higher rate, advanced rate and additional rate thresholds will remain frozen and their respective rates are unchanged.
The Government estimates that around 55% of Scottish taxpayers will pay less income tax next year than if they lived elsewhere in the UK.
What this means for you:
- If you are a starting, basic or intermediate earner, you may see a slight reduction in the amount of tax you pay.
- If you are a higher earner, your overall tax position may remain broadly the same or slightly increase due to frozen thresholds for the top bands.
Property income tax
The UK Budget increases tax rates on property income by two percentage points from 2027/28. The UK Finance (No 2) Bill contains provisions to allow the Scottish (and Welsh) governments to set their own property tax rate. The Scottish Budget Report made no change, merely noting the coming opportunity to do so.
Why these changes are being made
The Scottish Government has stated that these measures are designed to raise additional funding for:
- the NHS,
- public services, and
- long‑term investment in Scotland’s infrastructure.
Scotland continues to follow a more progressive tax structure than the rest of the UK—with the stated aim being to reduce the tax burden on lower earners while asking higher earners and owners of high‑value homes to contribute more.
How we can support you
These changes may have an impact on your take‑home income, property‑related costs, or financial plans.
We’re here to help you understand how the Budget could impact you personally and to explore any steps you may wish to take, such as:
- checking your financial plan remains on track, and/or
- exploring ways to improve tax‑efficiency.
Important information
This article is for information purposes only. It is not intended as financial advice.
Fees and charges apply.
Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
Personal and corporate tax advice are not offered by Schroders Personal Wealth. These are complex area and we recommend that you weigh up all the positives and negatives, and take professional advice before committing to a course of action.
In preparing this article we have used third party sources that we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.
