Scottish Budget 2026: EQ Accountants review
Scottish Budget 2026: What landlords need to know
Gordon W Buist, Partner, EQ Accountants | 14 January 2026
Finance Secretary Shona Robison’s 2026-27 Budget delivered a mixed bag for Scottish landlords. The headline? Property Income Tax rates remain unchanged, but a deep dive reveals that the landscape is shifting.
Property Income Tax: Scotland diverges from Westminster
The UK Budget announced a 2% increase to property Income Tax from April 2027. Scotland cannot yet follow suit because devolved powers don’t currently give it separate rate-setting power for property income.
However, the Scotland Act 2016 is being amended to devolve a separate rate-setting power for property income to Holyrood from 2027-28. Future Scottish Governments will therefore have the option to increase the rate of Income Tax on property income in line with the UK from the tax year 2027-28. Watch this space.
Income Tax: Thresholds rise at the bottom, freeze at the top
The basic and intermediate rate thresholds have increased by 7.4%: Scottish taxpayers will pay 19% until income reaches £16,537 and 20% until £29,526. However, the higher (42%), advanced (45%) and top (48%) rate thresholds remain frozen until April 2029.
Higher-earning landlords will feel the fiscal drag – where inflation pushes more income into higher bands, increasing tax bills by stealth. The break-even point where Scottish taxpayers pay more than their English counterparts sits at £33,493.
Council Tax: New bands target high-value properties
From April 2028, two new Council Tax bands will apply to residential properties valued above £1 million: band I (£1m to £2m) and band J (above £2m). These valuations will be current, not the controversial 1991 figures underpinning existing bands. Multipliers are unconfirmed, but landlords with high-value portfolios should factor in increased annual costs.
LBTT: Status quo, but review pending
LBTT rates remain unchanged. The Additional Dwelling Supplement (ADS) stays at 8%, and Scotland has not followed the UK in abolishing Multiple Dwellings Relief. However, the big LBTT review, examining first-time buyer relief, mixed-use transactions, lease taxation and ADS anomalies, will report before the May election. Legislation is unlikely until the next Parliament.
The bottom line
Scottish landlords have yet to hear whether they will face a property Income Tax increase from April 2027, but pressure remains from frozen thresholds, Council Tax reforms, and LBTT uncertainty. With a Holyrood election in May, policy could shift again. Now is a good time to review ownership structures – Multiple Dwellings Relief and the favourable LBTT treatment where six or more dwellings are transferred to a company may offer opportunities. However, incorporation is complex with Income Tax, Capital Gains Tax, and Inheritance Tax implications as well as LBTT, and a limited company is not the most tax and commercially efficient vehicle for all landlords, so take professional advice.
Gordon W Buist, Partner
14 January 2026
Gordon Buist is a tax partner at EQ Accountants and specialises in advising on property investment.
