Scotland’s latest Budget has put high-value property firmly in the spotlight, with ministers confirming plans to introduce new council tax bands for homes worth more than £1 million while leaving the rest of the system rooted in 1991 valuations.
From 2028, two new upper council tax bands will be created by splitting the current top bands, G and H, into four, in a move widely described as a Scottish “mansion tax”.
The government has set aside £5 million for a targeted revaluation of the most expensive properties to identify which homes will fall into the new bands.
The change is expected to hit owners of Scotland’s most valuable homes, particularly in Edinburgh, which accounts for more than half of all £1m-plus property sales. Registers of Scotland recorded 391 sales above that threshold in 2024-25, highlighting how concentrated the high-end market has become in parts of the capital.
NO WIDER REVALUATION
Ministers have ruled out a wider revaluation of all homes, meaning most properties will continue to be taxed based on their estimated 1991 value, despite sharp changes in prices over the past three decades.
A full rebanding exercise has previously been judged too politically and administratively disruptive, with officials estimating that around half of all homes would move band.
Alongside the property changes, income tax thresholds for lower and middle earners will rise by 7.4% but higher-rate thresholds will be frozen, adding to the overall tax burden on wealthier households – a group that overlaps heavily with owners of prime residential property.
MORE TAX MISERY
Sarah Coles, Head of Personal Finance, Hargreaves Lansdown, says: “The Scottish government is keen that those with the broadest shoulders carry the biggest burden, but the threshold freezes for higher earners pile more tax misery on an already hefty burden.
“On top of this, it is adding two new council tax bands by 2028, so anyone living in a property in Scotland worth £1 million or more will pay more. This will only affect those in pricey properties, but for those who bought them at much lower prices – and now find themselves property rich and cash poor – it could make everyday life far more of a stretch.”
“The Scottish Government are yet again failing to tackle the housing emergency.”
Timothy Douglas (main picture, inset), Head of Policy and Campaigns at Propertymark, says: “Despite a multi-year commitment to affordable housing supply and increased investment in acquisitions and homelessness prevention, it is surprising that the Scottish Government are yet again failing to tackle the housing emergency, and the Budget misses an important opportunity to address the growing tax burden on housing.
BARRIER TO HOME MOVING
He adds: “Land and Buildings Transaction Tax continues to act as a barrier to people moving home and to investment in the private rented sector, which can help bring down the cost of renting.
“The Housing Investment Task Force was clear that property tax should be reviewed to support housing supply and economic growth, yet this has not been meaningfully addressed, and additional levels of council tax brings yet more disparity in pricing and costs across the property sector.
“Scotland needs policies that encourage mobility and investment.”
“At a time of acute housing pressure, Scotland needs policies that encourage mobility and investment across all tenures.
“Without this focus, the current property tax regime does not encourage people to move, right size or relocate for work, while also deterring landlords from investing in much-needed rented homes.
“Furthermore, the Scottish Government miss out on the economic boost through increased transactions and spending in the wider economy.”
