The 2026-27 Budget was delivered on 13 January 2026 covering measures controlled by the Scottish parliament. This is the Scottish Government’s final budget ahead of the May election.
Ahead of the budget, support was sought by businesses and individuals to continue investment in property, the provision and procurement of affordable homes, and support for the retail, hospitality and leisure premises. We look at some of the tax measures that have been announced in response, or perhaps in spite of, those calls.
Land and Buildings Transaction Tax
Land and Buildings Transaction Tax (LBTT) is a fully devolved tax. It has a lower threshold than Stamp Duty Land Tax (SDLT) so in a number of comparable transactions you will pay more for LBTT than you would for the same transaction in England under SDLT.
There were no changes to the rates and thresholds of the Land and Buildings Transaction Tax (LBTT) in either the residential or non-residential systems. The Scottish Property Federation state that this will provide some stability in the property market, however others see it as a missed opportunity. With the Additional Dwelling Supplement rate being left unchanged at 8%, this may deter landlords from returning to the market, slowing potential rental supply, adding further pressure on rents and then reducing the ability of first-time buyers saving for deposits.
There will, however, continue to be a First-Time Buyer relief which increased the nil rate band from £145,000 to £175,000 for first time buyers. Analysis by DJ Alexander Ltd last September suggested that the average price of a home by a first-time buyer was £158,188, but with Edinburgh at £242,682 and Inverclyde at £96,148, the difference is stark. Calls for a zonal approach to reflect the regional price variations have been unanswered in this budget.
LBTT Review
LBTT is subject to a review by the Scottish Government that commenced in Spring 2025. This review is focusing on the bands and rates, multiple dwellings relief, first-time buyer relief and net-zero alignment. It is expected that the review will continue over the remainder of the current parliament and decisions on whether any legislative changes will be made for the next parliament.
Non- Domestic Rates
The budget offered reliefs for non-domestic rates with the Basic, Intermediate and Higher Property Rates being reduced in 2026/2027.
There will be a 15% non-domestic rates relief in 2026-2027 worth £138m over three years for retail, hospitality and leisure premises with a rateable value up to and including £100,000). For retail, hospitality and leisure premises located in specified remote areas or on defined islands, 100% rates relief will be offered capped at £110,000 per business per year.
The Small Business Bonus Scheme (the scheme offering non-domestic rates relief for properties with a combined rateable value of £35,00 or less) will be maintained for the next three years, but it will not apply to most properties with/requiring a short-term let licence
Residential Property - Taxes
From April 2028 a new tax, similar to that announced for England, will be introduced for properties worth more than £1m. In some commentary, this is referred to as a ‘mansion tax’. The proposal is to introduce two new high-value council tax bands:
- Band I for properties worth between £1 million and £2 million; and
- Band J for properties worth over £2 million.
These bands will be based on up-to-date valuations for those properties only, meaning that the other others remain subject to the existing 1991 valuation framework. In 2024-2025 there were 391 sales of residential properties over £1 million and over half of these were in Edinburgh. The criticism of these new bands is that the immediate impact will be narrow and regionally concentrated.
Legislation is also due to be introduced to remove the cap on council tax premiums for second and long-term empty homes, allowing local authorities to set higher rates from 1 April 2026.
