Scottish Budget 2026/27 High Income Tax and New Mansion Tax to Help Children
Published / Last Updated on 14/01/2026
The devolved Scottish Government published its annual Budget yesterday for tax year 2026/27.
See: Scottish Government Budget in Full
Quick Glance: there were some clear, but harsh for some, measures in there to:
- Reduce income taxes for those on lower incomes.
- Increase income taxes for average and higher incomes.
- A new ‘Mansion Tax’ from 2028, following actions taken in the Rachel Reeves’ Autumn Budget that affect England.
- With additional revenue being used for many things including help for children (the wains).
Scottish Rates of Income Tax Assisting Lower Incomes
- The income tax threshold for basic rate 20% income tax will be increased by 7.4% to £16,258.
- The income tax threshold for inetermediate rate 21% income tax will be increased by 7.4% to £29,527.
Scottish Rates of Income Tax for Average and Higher Incomes
Tax allowances were frozen, meaning even more people earning average and higher incomes will pay even more taxes.
When compared to income taxes in England, Wales and Northern Ireland, there is a huge difference in taxation.
|
Scotland |
2026 to 2027 |
|
Rest of UK (England, Wales, N. Ireland) |
2026 to 2027 |
||
|
Band |
Rate |
Band |
Rate |
|||
|
Personal Allowance |
£0 - £12,570 |
0% |
Personal Allowance |
£0 - £12,570 |
0% |
|
|
Starter Rate |
£12,571*- £16,537 |
19% |
|
|||
|
Basic Rate |
£16,538 - £29,526 |
20% |
Basic Rate |
£12,571- £50,270 |
20% |
|
|
Intermediate Rate |
£29,527 - £43,662 |
21% |
|
|||
|
Higher Rate |
£43,663 - £75,000 |
42% |
Higher Rate |
£50,271 - £125,140** |
40% |
|
|
Advanced Rate |
£75,001 - £125,140** |
45% |
|
|||
|
Top Rate |
Over £125,140 |
48% |
Additional Rate |
Over £125,140 |
45% |
|
*Assumes individuals are in receipt of the standard 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 has claimed that no Scottish Tax Payer will pay more in Scottish Income Tax in 2026/27 than they did in 2025/26, but this is slightly ‘warped’. This may be the case but it assumes you have exacty the same income, i.e., you have had no pay rise, no increase in state, company or private pensions etc. In short, with inflationary increases, you will have to be poorer in real terms in 2026/27 to have no tax rises.
The reality is a person in Scotland with income of £50,000 pa will pay £1,480 pa more income tax and a person with an income of £100,000 will pay £3,230 pa more income tax than if they lived in England/Wales/NI.
Scotland’s New Mansion Tax
Rachel Reeves’ Autumn Budget confirmed that a new ‘mansion tax’ via a ‘High Value Council Tax Charge’ (HVCTC) will be introduced in England from April 2028:
- £2m + property value = £2,500 pa extra HVCTC on top of local council tax rates.
- £5m + property value = £7,500 pa extra HVCTC on top of local council tax rates.
Yesterday, the Scottish Budget confirmed that two new council tax bands will be introduced from April 2028:
- Band I for £1m + property values
- Band J for £2m + property values
- These rates will be set by local authorities and be based upon the current market value.
- Existing bands A-H will remain with rates set based upon the property value currently used.
Where is the Extra Scottish Tax Revenue Being Spent?
In the Scottish Budget, the headline proposals were:
Cost of Living Packages (New):
- A new after school activities programme for a range of primary schools between 3pm and 6pm. This will allow working parents of younger children to work more hours if needed as well as giving children something to do.
- A Summer of Sport: free sporting including lessons on how to swim for every primary school child in the country.
- Breakfast Club from from August 2027 for every primary school.
Cost of Living Packages (Continue):
- Free prescriptions.
- Free eye tests.
- No ‘peak time’ railfairs for ScotRail trains.
- Free tuition fees for Scottish students studying in Scotland.
- Free school meals for even more children and free for all early years pupils in years 1-5.
- Free bus passes for under 22s and over 60s, to protect students, young workers and the elderly from increased travel costs.
Scottish Child Payment
- For all children in the UK, including Scotland, parents receive Child Benefit.
- In Scotland there is an additional Scottish Child payment (for lower income families) that will increase to £28.20 per week for children in eligible households and for babies (0-12 momths), this increases to £40 per week in eligible households.
Additional Funding for:
- £50 million additional support for lower income families.
- Additional and record funding for social care, universities, colleges, climate change and more.
Comment from South of the Border
We believe that people outside Scotland do not pay enough in income taxes when compared to Scotland or most of Europe. It is no wonder that public servces struggle. We believe that a model that means anyone with income of more than £30,000 pa across the UK should pay more taxes and those with incomes below this should pay less taxes, as is the case in Scotland.
Contact Call Back Calculators Our Fees
We genuinely believe that the UK would be better served as a whole if Scottish Rates of Income Tax (SRIT) and allowances were adopted nationwide.
