Autumn Budget 2026: what it means for landlords in Scotland

Article by EQ Accountants, 30 October 2026

John Healey delivered his first Budget as Chancellor this week. If you let out property, the big news is another 2% rise in the tax on rental income from April 2027. That’s on top of the rise announced last November.

If you’re a landlord in Scotland, though, it doesn’t automatically apply to you. That decision now sits with the Scottish Government. And if you have property on both sides of the border, it’s worth being clear on which rules you fall under.

Capital gains tax on property hasn’t changed, and the cash ISA allowance stays at £20,000. We’ve covered those, and a few other changes, further down.

The new rates in England, Wales and Northern Ireland

From 6 April 2027, individual landlords outside Scotland will pay their own, higher set of income tax rates on rental profits.

Mortgage interest and other finance costs are expected to get relief as a 24% tax credit, in line with the new basic rate. If you pay tax at the higher or additional rate, you’ll still only get relief at the basic rate (now 24%). That’s the existing rule on finance costs, often called Section 24.

The £1,000 property allowance and Rent a Room relief stay as they are. The trading allowance for side income is tripling to £3,000, but there’s no matching rise for property income.

If you own property through a limited company, these rates don’t affect you. Companies pay corporation tax, not income tax.

What happens in Scotland?

The UK rates above don’t automatically apply to Scottish taxpayers. Right now, if you’re a Scottish taxpayer, your rental income is taxed at the same Scottish rates and bands as your earnings.

That’s about to change. From 2027-28, the Scottish Parliament will be able to set its own rate of income tax on property income for the first time.

In its Budget back in January, the Scottish Government left the door open to matching last year’s two-point rise from 2027-28. Now it has to decide whether to follow the full four points, go for something smaller, or leave things as they are.

We’ll know more when the Scottish Budget for 2027-28 comes out on 3 December 2026. Until then, it makes sense to plan for a few different outcomes.

The UK Budget also gives the Scottish Government around £600 million in extra funding up to 2029-30, through the Barnett formula. How it spends that is up to Holyrood.

Property on both sides of the border? It’s where you live that counts

The rate you pay on rental income depends on where you live, not where the property is. Whether you’re a Scottish taxpayer comes down to where your main home is.

So if the Scottish Government doesn’t match the UK rise, a landlord living in Scotland with a flat in England could pay less tax on it than their English neighbours. If you’re moving across the border, or splitting your time between the two, it’s worth checking your taxpayer status with your adviser.

Other changes that might affect you

These apply across the UK, Scotland included.

Savings income: Tax on savings interest goes up by another two points from April 2027, to 24%, 44% and 49%. Westminster sets these rates, so Scottish taxpayers are affected too. The cash ISA allowance stays at £20,000, after a planned cut was dropped.

Capital gains tax: No change here. Gains on residential property are still taxed at 18% and 24%, after a £3,000 annual exemption. The cut to Business Asset Disposal Relief rarely applies to rental property.

Inheritance tax: The £325,000 nil-rate band and £175,000 residence nil-rate band stay frozen until April 2031. From 6 April 2027, most unused pension funds will count towards your estate, so it’s worth bearing in mind when you look at your estate plan.

Paying your tax: From 2029, self-assessment moves away from lump sums in January and July to smaller, more regular payments.

Making Tax Digital: Not new, but a quick reminder. Landlords with qualifying income over £50,000 have been in since April 2026, and the threshold drops to £30,000 from April 2027.

Commercial property, companies and council tax

Business rates relief is England only. South of the border, small business rates relief for retail, hospitality and leisure properties goes up from £12,000 to £18,000 of rateable value, with tapered relief up to £21,000. Other properties in those sectors get a two-year rates freeze, and pubs and music venues get an extra 20% off.

None of this applies to commercial property in Scotland, as business rates are devolved. The Scottish Government does get extra funding linked to these measures, though, so keep an eye on the Scottish Budget in case something similar follows.

Owning through a company looks a bit more attractive. The new property income rates only apply to individuals, so the gap between owning personally and owning through a company has widened. But moving property you already own into a company can trigger capital gains tax, plus Land and Buildings Transaction Tax (LBTT) or Stamp Duty Land Tax. Talk to an advisor before you restructure anything.

Council tax on higher-value homes: The UK Government’s new High Value Council Tax Surcharge is England only. In Scotland, two new council tax bands for higher-value homes are due from April 2028, as announced in the Scottish Budget in January.

What to do now

• Work out how a two-point or four-point change would affect each of your properties. That way you can plan with confidence, whatever the Scottish Budget brings on 3 December.
• If you live in England, budget for the new 24%, 44% and 49% rates from April 2027, wherever your properties are.
• Take another look at whether owning personally or through a company still suits you, bearing in mind what it would cost to switch.
• Check where you stand on Making Tax Digital if your qualifying income is over £30,000.
• Revisit your estate plan, especially if you have pension funds that will count towards it from April 2027.

For the full picture, read EQ’s complete Autumn Budget 2026 summary.

If you’d like to talk through what the Budget means for your properties, get in touch with the team at EQ Accountants on info@eqaccountants.co.uk or 01382 312100.