Breakdown: Scottish Budget 2026-27

On Tuesday, Scotland's finance secretary Shona Robison revealed her budget for 2026-27. Here's a breakdown of the key points.

Tax

• The Basic and Intermediate rate thresholds for income tax will be increased by 7.4%.
• The Higher, Advanced and Top rate thresholds will be maintained at their current levels until 2028-29.
• The Intermediate and Higher Property Rates for Non-Domestic Rates in 2026-27 will decrease to reflect overall growth in rateable values at revaluation.
• Small Business Bonus Scheme relief will be maintained at the existing rates and thresholds for the next three years of the revaluation cycle.
• Will provide 15% rates relief in 2026-27, and for the duration of the three-year revaluation cycle, to properties in the retail, hospitality, and leisure sectors which are liable for the Basic or Intermediate Property Rate (those with a rateable value up to and including £100,000), capped at £110,000 per business per year.
• Will extend and expand 100% relief in 2026-27 in island communities, and for the duration of the three-year revaluation cycle, to properties in the retail, hospitality, and leisure sectors located on islands as defined by the Islands (Scotland) Act 2018, and in three prescribed remote areas (Cape Wrath, Knoydart and Scoraig), capped at £110,000 per business per year.
• The Scottish Government will introduce new high value Council Tax bands for the most expensive residential properties from 01 April 2028. Two new bands will be created above the current highest band:
  • Band I for properties valued between £1million and £2million; and
  • Band J for properties valued above £2million.
• These bands will be based on up-to-date values for those properties only, with all other homes remaining on the existing Council Tax valuation framework.
• Air Departure Tax become operational on 01 April 2027. From that date, the existing UK-wide Air Passenger Duty will cease to apply to the carriage of passengers by air from Scottish airports.
• A Private Jet Supplement within ADT will be brought forward in 2028-29.
• The Building Safety Levy will commence on 01 April 2028. To provide industry with advance certainty, the Scottish Government intends to publish Levy rates in June 2026, 22 months in advance of the commencement of the Levy.

Finance & Local Government

• The 2026-27 Budget delivers a real terms increase in the Local Government Settlement to £15.686.1million compared to an allocation of £15,035.2million in 2025-26.
• Will lead on the implementation of the Public Service Reform (PSR) strategy which sets out our commitment to delivering more efficient, better-coordinated services and prioritising preventative investment.
• Will issue the first Scottish Government Bond, as part of a multi-year £1.5billion issuance programme, to support capital investment.
• Will ensure a ‘Once for Scotland’ approach to prioritise those initiatives that consistently yield high returns in the form of both cashable savings and cost avoidance across the wider public sector and are critical to achieving the £1billion savings target in the PSR Strategy.
• Continuing support via the National Planning Hub targeting capability and expertise in planning authorities where it is most needed to maximise impact and accelerate development.

Education & Skills

• Scotland’s colleges will see a combined increase of £70million in resource and capital funding, equivalent to a 10% uplift on last year’s budget.
• Continued investment in apprenticeships, careers advice, Developing the Young Workforce and adult learning will strengthen pathways into and through employment, supporting economic outcomes, helping parents and carers to sustain and progress in work, and help tackle child poverty.
• Continue to fund flexible and affordable childcare through our Early Adopter Communities and continue commitment to supporting the real Living Wage in private and voluntary sector ELC and children’s social care services.

Transport

• In 2026-27, will invest nearly £4.3billion to maintain and enhance Scotland’s transport network. This includes £2.7billion for public transport services and infrastructure and £1.2billion for the safe operation and improvement of the strategic trunk road network.
• In 2026-27, will invest £1.8million to remove peak fares for Northern Isles Ferry Services, with recurring future investment, making travel more affordable.
• Will invest £4million in 2026-27 to support Local Authorities to build business cases for local bus improvements through franchising, using powers created in the Transport (Scotland) Act 2019.
• Will invest £1.2billion to maintain and improve the trunk road network, progress major projects such as A9 dualling and enhance road safety to reduce injuries and fatalities.
• Will invest £226million in active travel and bus infrastructure and £85 million in low carbon programmes including expanding public EV charging infrastructure and supporting zero-emission vehicles.

Housing

• Will invest up to £4.9billion over the next four years – including a record £4.1billion of public sector funding – to support delivery of 36,000 affordable homes and our wider all-tenure ambition.
• Will bring Awaab’s law into force in the social and private rented sectors starting with damp and mould to ensure tenants’ health and wellbeing is protected by quickly addressing health hazards.
• Will provide support for the new statutory homelessness prevention duties and ensure intervention starts as early as possible.

Rural Affairs, Land Reform & Islands

• Will provide over £660million in support to Scottish farmers, crofters, land managers and rural communities, maintaining direct payments and investing in transforming farming and food production.
• Will also invest £1.3million in skills for regenerative and sustainable farming and food production, provide funding for Lantra Scotland, implement the Land Based Learning Review recommendations and promote agritourism.
• Will invest £28million to restore over 10,000 hectares of peatland and £37million to create more than 12,000 hectares of woodland.
• Island communities will benefit from a new National Islands Plan, continuation of the Carbon Neutral Islands project, and £7.1million for island-specific investments. £9.3million will be invested in Community Led Local Development, as we consider findings from the Scottish Rural Communities Policy Review.

Climate Action & Energy

• Will invest a further £93million Capital and Financial Transaction funding to maintain momentum in the offshore wind sector, leveraging private investment into manufacturing and infrastructure projects that will create and sustain thousands of jobs.
• A further £16million for the Just Transition Fund to respond to the needs of the North-east and Moray, delivering benefits for businesses, workers and communities as we transition to a net zero future.
• £16million will help secure a sustainable future for Grangemouth safeguarding its role as a leading industrial cluster, as well as a further £33million within Energy Transitions to promote a secure, efficient and sustainable energy supply.
• Domestic Climate Change package will provide a further £22million investment, which includes £6million to continue network of Community Climate Action Hubs that empower local communities to develop place-based responses to climate change, and £1million to support the Scottish Climate Intelligence Service, helping local authorities baseline emissions and plan for climate impacts. 

Constitution, External Affairs & Culture

• Increase in the arts and culture budget of over £70million compared to 2023-24.
• Creative Scotland will receive an additional £20 million for its multi-year funding programme in 2026-27, taking the funding available to £74million in 2026-27.
• Screen Scotland are receiving an uplift of £800,000 in 2026-27, in recognition of their distinct contribution in support the increasing cultural and economic benefit to Scotland from growing screen sector.
• Providing £11.65million for The Art Works project, to establish a National Collections Hub for National Galleries of Scotland and National Museums of Scotland, delivering significant socio-economic benefits as part of City of Edinburgh Council’s Granton Regeneration.
• Also providing an additional £1.25million to The King’s Theatre in Edinburgh in 2026-27 for their redevelopment, in addition to having provided support in 2025-26.
• Support for Scotland’s International Development Fund and the Humanitarian Emergency Fund will grow to £16million in 2026-27.