The Scottish Government’s Finance Secretary, Shona Robison, set out her Government’s tax and spending plans for the 2026/27 financial year. The Scottish Parliament has control over Scottish rates of Income Tax on certain types of income. It also controls spending on devolved areas such as health and education, as well as having control of some state benefits.

Income Tax

Rates for 2026/27

The main Scottish Rates of Income Tax for 2026/27 were announced in the budget.

There are six Income Tax bands in Scotland, meaning that the jump to the higher rate of Income Tax is much lower in Scotland than elsewhere in the UK. An English taxpayer is a basic rate taxpayer until their total income exceeds £50,000, whereas a Scottish taxpayer will pay tax at the higher rate of 42% when their income exceeds around £43,000.

The thresholds for the starter rate of income tax will increase from £15,397 to £16,537 and the basic rate threshold will increase from £27,491 to £29,526. There were no other changes to Income Tax rates, bands or thresholds.

The current and future rates of Scottish Income Tax are shown in the table below:

The changes today mean that for the 2026/27 tax year, a person earning £35,000 will pay £32 less Income Tax than the current year. They will pay £15 more than they would have if they lived in England, Wales or Northern Ireland in 2026/27.

Income Tax on Property

It was announced in the UK budget in November that the rates of Income Tax on property income would be separated out from the main rates, and each increase by 2 percentage points. This change will apply from 6 April 2027. This means that a basic rate taxpayer in England, Wales and Northern Ireland will pay tax at 22% on property profits rather than the current 20%.

The property income rates are to be devolved to the Scottish Parliament, meaning that the Scottish Government can set separate rates of Income Tax on property rental profits.

In her budget statement today, Ms Robison did not make any announcements in relation to Income Tax on property letting, and this will be decided in a future budget.

Business Rates

Control over Business Rates in Scotland is split between local authorities (councils) and the Scottish Government. The local council determines the rateable value of a property, based on the approximate annual rental cost of the property on the open market. The Scottish Government decides the “poundage”, which is multiplied by the rateable value to give the amount due to be paid in Business Rates for the year.

Many properties don’t pay business rates due to a variety of reliefs and exemptions, mainly the Small Business Bonus Scheme (SBBS), which provides 100% rates relief on properties with a value less than £15,000.

The Finance Secretary announced today that the basic property poundage, for properties with a rateable value of up to £51,000 will decrease from 49.8p to 48.1p. The intermediate rate will decrease to 53.5p and the higher rate to 54.8p.

Other taxes

The Scottish Parliament controls Land and Buildings Transaction Tax (LBTT) – Scotland’s equivalent to Stamp Duty, which is charged on property purchases and is payable by the purchaser. There were no changes to LBTT in this budget

There were no major changes announced to the Scottish Landfill Tax in today’s budget.

Scottish Aggregates Tax will come into force from 1 April 2026. This tax replaces the UK-wide Aggregates Levy in Scotland and is charged on the commercial exploitation of aggregates. The rates charged will initially be the same as they are for UK Aggregates Levy.

Finally, the Finance Secretary announced that two new Council Tax bandings – Band I and Band J – will be introduced. Properties with a current value of between £1 million and £2 million will fall into Band I and those with values over £2 million will fall into Band J. This will come into force from 1 April 2028, and the valuations will be based on current values, not 1991 values as is the case for other Council Tax bands.