Shona Robison, Finance Minister of Scotland, told the Scottish Parliament that “This is a budget focused on a brighter future for Scotland and the people who live here.” Advising that priority for Scotland is to ‘build a tax system that is more progressive,’
INCOME TAX
While the rest of the UK faces years of frozen thresholds, Robison set out plans to raise Income Tax thresholds for lower earners from 6 April 2026, with the thresholds for both the basic and intermediate rates of Income Tax to be increased by 7.4%. The higher, advanced and top rate thresholds for Income Tax will be frozen.
The table below shows the current and 2027 tax year thresholds and rates.
|
Band |
Income range |
Tax rate |
|
|
2026-27 |
2025-26 |
||
|
Starter |
£12,571 - £16,537 |
£12,571 - £15,397 |
19% |
|
Basic |
£16,538 - £29,526 |
£15,398 - £27,491 |
20% |
|
Intermediate |
£29,527 - £43,662 |
£27,492 - £43,662 |
21% |
|
Higher |
£43,663 - £75,000 |
£43,663 - £75,000 |
42% |
|
Advanced |
£75,001 - £125,140 |
£75,001 - £125,140 |
45% |
|
Top |
Over £125,140 |
Over £125,140 |
48% |
The UK Government increased the Dividend Income rate by 2% from April 2026, with further increases on savings and Property Income from April 2027. Scotland will raise the rate of Dividend Tax from April 2026 and the rate of Savings Income from April 2027.
However, the Scottish Government can set their own Property Income tax rate. However, no change to Property Income Tax was announced. This will offer some relief for Landlords and Tenants.
PROPERTY TAXES
For high value properties, two new council tax bands for high value properties, hitting properties valued at over £1m, will come into effect in April 2028, for the most expensive properties in Scotland. Estimated this will impact around 11,000 homes in the whole of Scotland.
A "targeted revaluation" of the most expensive homes in Scotland will result in two extra higher council tax bands being created - one for properties valued between £1m and £2m, and one for homes valued above £2m.
There will be no changes to Scottish Land and Buildings Transaction Tax (LBTT), and Landfill Tax.
AIR TAXES
A departure tax for private jets will be introduced from April 2027, details still to be announced.
A new Airport Departure Tax from April 2027, to replace the UK system. The UK-wide air Passenger Duty will continue to apply in Scotland until the new air departure tax is implemented. No further details were provided, other than there will be some protection for Scottish islands which are more dependent on flights.
BUSINESS RATE RELIEF
For businesses, there will be additional relief on Business Rates for the next three years on the intermediate and basic property rate, which will vary in scale from the small business bonus scheme to retail, hospitality and leisure support, with those affected paying zero or low rates.
The current 40% Non‑Domestic Rates Relief for hospitality premises liable for the basic property rate (with a rateable value up to and including £51,000), will be capped at £110,000 per business.
Additionally, the 100% Non‑Domestic rates relief currently available for hospitality premises located on islands, as well as specified remote areas, will be capped at £110,000 per business.
