The Scottish Government Budget 2025/2026

The Scottish Government announced the details of its proposed budget for 2025/2026 on 4 December 2024.

Income Tax

Income tax rates will be frozen and no new tax bands will be introduced for the remainder of the Scottish Parliament.

The bands for the basic and starter rate will increase by 3.5%.

Proposed Bands	Band name	Rate (%)
£12,571*– £15,397	Starter Rate	19
£15,398 – £27,491	Scottish Basic Rate	20
£27,492 – £43,662	Intermediate Rate	21
£43,663 – £75,000	Higher Rate	42
£75,001 – £125,140**	Advanced Rate	45
Above £125,140**	Top Rate	48

* assumes individuals are in receipt of the Standard UK Personal Allowance.
** those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

Additional Dwelling Supplement (ADS)

The Additional Dwelling Supplement (ADS) rate will be increased from 6% to 8% on 5 December 2024.

ADS is an additional charge added to Land and Buildings Transaction Tax (LBTT) charged on the purchase of properties by landlords and second home owners.

Non-domestic rates: 2025 to 2026

The Basic Property Rate will be frozen at 49.8p.

There will be inflationary increases to the Intermediate and Higher Property Rates, at 55.4p and 56.8p respectively.

The 100% relief, capped at £110,000 per business for hospitality properties (including grassroots music venues with a capacity of 1,500) on islands and specified remote areas (Cape Wrath, Knoydart, and Scoraig) will be maintained.

There will be a new 40% relief, capped at £110,000 per business for hospitality premises (excluding those eligible for the islands and specified remote areas hospitality relief above) with rateable values up to and including £51,000, including grassroots music venues with a capacity of 500.

Council Tax

The freeze on council tax charges will be discontinued.  But “there should be no reason for large increases in council tax” as Scottish councils funding will be increased by more than £1 billion.

Farmers

There was a pledge of over £660m to support Scotland’s farmers.

The Scottish Government will return in full the savings that were used in previous Scottish budgets through a new capital transformation scheme with £20m of funding in 2025/2026 and the remainder in 2026/2027.

Funding of £90m was also announced to maintain woodland and peatlands across Scotland.

Two Child Benefit Cap  

The Scottish Government plans to mitigate the impact of the two child benefit cap implemented by the UK Government back in 2017.  The UK Government policy limits benefits for families with more than two children.

Provided it can get the necessary information from the UK Government, this will take effect as early as possible in 2026.

NHS

There will be a £2 billion increase in funding for the NHS.

This should make it easier to make GP appointments and improve the A & E service.

Housing

There was a pledge of £768m to provide 8,000 more affordable homes.

Note that the above measures are only proposals (apart from the increase in ADS which takes effect on 5 December 2024) at the moment, as the SNP are a minority Government and will need the support of other MSPs to pass the budget into law.