On 13 January 2026, Finance Secretary Shona Robison unveiled her final draft Budget for 2026–27 ahead of the upcoming Holyrood election.
This year’s Budget brings several changes - most notably to income tax thresholds, council tax bands, and non-domestic rates. Here’s what you need to know and how we can support you.
1. Income Tax Threshold Adjustments
- Basic-rate threshold (20%) will rise from £15,398 to £16,537 (+7.4%).
- Intermediate-rate threshold (21%) increases from £27,492 to £29,527 (+7.4%).
- Higher advanced, and top rates remain unchanged (higher remains £43,663 start point).
What this means for you
– Lower and middle earners will pay less tax.
– Threshold adjustments curb fiscal drag and could open eligibility for tax-efficient planning.
2. Mansion Tax / Council Tax Bands
- Two new council‑tax bands are being introduced for properties valued over £1 million, to be implemented by April 2028.
- Specific band thresholds and surcharge levels are under consultation.
What this means for you
– Owners of high‑value residential properties might face significant increases in council tax liability starting in 2028.
– Proper valuation and timing of sales or transfers may significantly affect overall tax exposure.
3. Business Rates Reductions & Relief
- Property‑rate reductions apply to basic, intermediate, and higher bands.
- A 15% non-domestic rates relief is available in 2026–27 for retail, hospitality, and leisure premises, capped at £110,000 per business per year and totalling around £138 million over the revaluation cycle.
- The Small Business Bonus Scheme continues for the next three years, meaning more than 96% of retail, hospitality, and leisure businesses will pay zero or reduced rates.
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For tailored advice on how the Scottish Budget may affect you or your business, contact us here.
Contributors
Anne Littlejohn, Partner
Residential Property
Matt Fraser, Trainee Solictor
Corporate