Shona Robison, Cabinet Secretary for Finance and Local Government, delivered the Scottish Budget 2026-27 on 13 January 2026.  

Income tax is partially devolved to the Scottish Parliament, which has the power to set the rates and thresholds applying to the non-savings and non-dividend income of Scottish taxpayers. Land and buildings transaction tax (LBTT) and Scottish landfill tax (SLfT) are fully devolved to the Scottish parliament, as is the non-domestic rates framework for Scotland. 

Scottish income tax 

The Scottish government announced that the thresholds at which the basic and intermediate rates of tax are paid will increase by 7.4% for 2026/27. No changes will be made to the rates of tax or to the thresholds for the higher, advanced and top rate bands.   

*Assumes individual is in receipt of the standard UK personal allowance. 

**Those earning more than £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000. 

The Scottish government estimates that more than half (approximately 57%) of Scottish taxpayers will pay less in income tax in 2026/27 than in the rest of the UK, fulfilling a commitment made by the Scottish government previously, including in its December 2024 tax strategy.  

Land and buildings transaction tax 

The Scottish government will: 

• not make changes to the residential and non-residential rates and bands for LBTT;
• maintain first-time buyer relief at the current level;
• provide an exemption for transactions in co-ownership authorised contractual scheme (CoACS) units with effect from April 2026; and
• continue to consider the case for:
  • introducing a reserved investor fund (RIF) framework under LBTT; and
  • relief for the seeding of properties from existing unauthorised investment vehicles into property authorised investment funds (PAIFs), RIFs, and CoACS.

The Scottish government also provided an update on its comprehensive review of LBTT. As part of this work, the Scottish government has commissioned independent external researchers to explore several key policy areas, including first-time buyer relief and the treatment of mixed-use transactions. Alongside this, the Scottish government is conducting an internal review into non-residential leases, measures to support investment and the impact of the additional dwellings supplement where there are exceptional circumstances or events.  

Non-domestic rates (business rates) 

Ahead of the next revaluation, which will take effect on 1 April 2026, the Scottish government announced that it will: 

• reduce the basic, intermediate and higher property rates in 2026/27; and
• offer a “generous relief package”, including:
  • giving 15% relief to properties in the retail, hospitality, and leisure sectors which are liable for the basic or intermediate property rate;
  • capping increases due to the revaluation at 15% in cash terms for small properties, rising in subsequent years (revaluation transitional relief);
  • maintaining the small business bonus scheme (SBBS) relief at the existing rates and thresholds for the next three years of the revaluation cycle; and
  • introducing small business transitional relief to ensure that those ratepayers who lose eligibility for reliefs, including SBBS relief, in April 2026 do so in a phased manner.

The Scottish government estimates that non-domestic rates reliefs will save ratepayers £864m in 2026/27 and that over 96 per cent of retail, hospitality and leisure properties will pay zero or reduced rates.  

Referring to possible changes to business rates for pubs in England, Shona Robison said that the Scottish government is “still awaiting details” from the UK government but that, if additional resources become available, the Scottish government is “ready to use these to provide even further support for the sector in Scotland”. 

Other announcements 

• Council tax. New council tax bands will be introduced from April 2028 for residential properties valued at £1m more. 
• SLfT. Rates of SLfT will be increased to align with UK landfill tax rates for 2026/27. The Scottish landfill communities fund (SLCF) will be closed to new contributions from 1 April 2026. 
• Scottish aggregates tax (SAT). SAT will replace the UK aggregates levy in Scotland from April 2026. To ensure stability, the SAT rate will align with the UK aggregates levy rate for 2026/27.  

Next steps 

Members of the Scottish Parliament (MSPs) will now debate the Scottish government’s plans before voting on whether to pass the Budget Bill. 

The proposed income tax rates and bands are not part of the Budget Bill and are instead set out in a Scottish rate resolution (SRR). MSPs will consider the SRR before the final stage of the Budget Bill. 

Further information

• Scottish Budget - gov.scot