The Scottish Government has published its budget for 2026-27, introducing changes that will affect individuals, families, and businesses across Scotland. At SBP, our Head of Tax, Mark Rhynas, has reviewed the announcements and what they mean in practical terms, helping you understand how to plan and take advantage of the opportunities available.
One of the most significant updates is on income tax. The budget increases the starter and basic rate threshold bands by 7.4%, while the intermediate, higher, advanced, and top rate thresholds remain unchanged. This means a greater proportion of income will be taxed at the lower rates for some taxpayers, potentially reducing the overall tax burden for those whose earnings fall within these bands.
The updated Scottish Income Tax bands for 2026–27 are:
- Starter: £12,570 – £16,537 at 19%
- Basic: £16,538 – £29,526 at 20%
- Intermediate: £29,527 – £43,662 at 21%
- Higher: £43,663 – £75,000 at 42%
- Advanced: £75,001 – £125,140 at 45%
- Top: £125,140+ at 48%
Looking ahead, council tax will also see changes from April 2028, with two new bands being introduced for properties valued over £1 million. While this is still a few years away, high-value property owners should start thinking about how this could affect their long-term plans.
For businesses, the budget brings some positive news that relief on business rates will continue for the next three years, particularly for intermediate properties. Support will be scaled depending on the sector, including small businesses and those in retail, hospitality, and leisure. Many businesses affected could pay zero or very low rates, providing valuable cash flow relief and an opportunity to reinvest in growth.
The budget also introduces a private jet departure tax from 2027, alongside a new airport departure tax (ADT). Meanwhile, the Land and Buildings Transaction Tax (LBTT) and landfill tax rates remain unchanged, providing some stability in these areas.
The 2026 Scottish Budget offers a mix of support and targeted measures. Increased income tax thresholds provide relief for many individuals, while extended business rates relief gives small and medium-sized enterprises the breathing space to grow. At the same time, higher earners and owners of high-value properties will continue to face significant liabilities. Planning ahead will be key to making the most of the changes.
At SBP, we continue to monitor these developments closely. Our goal is to help clients in the North East of Scotland plan ahead, manage their tax efficiently, and take advantage of the reliefs and opportunities the budget offers.