Scottish Budget 2026-27: How will it impact your finances?

Market analysis
Insights

We unpack the Scottish Government’s tax and spending plans for 2026-27 and beyond, highlighting how these changes could affect personal finances.

13 January 2026 | 4 minute read

Finance Secretary Shona Robison delivered her final Budget just four months before Scotland’s Holyrood elections in May. With the Scottish National Party (SNP) seeking re-election to implement these plans, she faced tough decisions to balance tax and spending priorities.

Robison framed this Budget as one of “delivery and hope,” prioritising Scottish families, a stronger NHS, and infrastructure investment. With a focus on growth – from expanded college funding to support for young homebuyers – she pledged to take the “best next steps” for Scotland’s future.

Key measures impacting personal finances

New council tax bands

  • Much like the High Value Council Tax Surcharge (or “mansion tax”) announced in the recent UK Autumn Budget, Scotland will introduce two additional council tax bands for properties worth over £1m by April 2028, based on an up-to-date valuation.
  • Existing council tax bands A to H will stay unchanged for most homeowners. However, Band I will apply to properties valued between £1 million and £2 million, while Band J will cover those valued above £2 million.

Income tax

  • Thresholds before you pay the basic and intermediate rates of tax in Scotland will increase by 7.4% for 2026/27’s tax year.
  • Robison confirmed that 55% of workers, who are subject to Scottish income tax, will pay less than they would if they were subject to income tax elsewhere in the UK.
  • Strategic use of salary sacrifice arrangements for pension contributions can help individuals optimise their position within income tax bands. Additionally, transferring the marriage allowance between spouses or civil partners enables couples to collectively reduce their overall income tax liability.

Scottish income tax levels planned for 2026-27

Tax band nameEarningsRate
Personal allowanceUnder £12,570*0
Starter rate£12,571 – £16,53719%
Basic rate£16,538 – £29,52620%
Intermediate rate£29,527 – £43,66221%
Higher rate£43,663 – £75,00042%
Advanced rate£75,001 – £125,14045%
Top rateOver £125,14048%
*Reduced by £1 for every £2 earned over £100,000

Private jet tax

  • A new levy introduced to target luxury air travel.
  • This will be introduced via a Private Jet Supplement under the Air Departure Tax (ADT) in 2028–2029. This targets the higher emissions of private jets versus commercial flights, ensuring fairer contributions from high-impact travel.

Scottish child payment boost

  • Families with babies under the age of one will receive £40/week (up from £27.15) in the 2027/28 tax year.

Business rates relief

  • Reductions in basic, intermediate, and higher property rates in 2026/27’s tax year.
  • Eligible businesses in the retail, hospitality, and leisure sectors will receive a 15% relief on Non-Domestic Rates for premises with a rateable value of £100,000 or less, liable for the Basic or Intermediate Property Rates. This relief, capped at £110,000 per business annually, will be available over the three-year period from 2026 to 2029, providing targeted support to help these sectors manage costs and foster growth.
  • The small business bonus scheme – which exempts over 100,000 small businesses from paying rates – will be extended for three years.

Land and buildings transaction tax

  • No changes to rates or thresholds.

Daniel Hough, a wealth manager in RBC Brewin Dolphin’s Glasgow office, provides analysis:

“Today’s Scottish Budget provided a welcome break for taxpayers with an increase in the basic and intermediate income tax bands. As a result, more individuals will potentially be paying less income tax from the 2026/27 tax year. On the other hand, the freezing of the higher, advanced and top rate income tax bands remains in line with the UK.­­­­­­

We also saw Scotland follow the UK’s example and introduce a ‘mansion tax’ with the announcement of two new council tax bands for high-value homes that will be paid on properties worth £1m upwards from 2028, however this is a change likely to affect only a small number of properties.

Moving away from personal finances, the other big winner will be businesses with 96% of retail, hospitality and leisure businesses expected to pay no or reduced business rates in the next tax year, further supporting the local economy.

On the whole, this was a crowd-pleaser Budget, with support packages for the average working person and measures for families, young people, businesses, healthcare and the environment.”

For comprehensive details on all measures announced in the Scottish Budget 2026–2027, please refer to the official document.

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