Scottish budget hints at future increase in property tax

SAL is disappointed that the Scottish Government, in its 2026-27 budget which was published yesterday, has left the door open for a future 2p increase in the rate of income tax charged on property income. Rather than commit not to replicating this damaging tax rise announced by the UK government in December, the budget report states that this increase could come into effect in Scotland in the tax year 2027-28, subject to legislative consent from the Scottish Parliament. This is a tax on investment in housing which will put upward pressure on rents and hinder the ability of landlords to improve the quality and supply of properties in the private rented sector in response to the housing emergency.

Landlords will be relieved to hear that there will be no rise in the already punitive level of LBTT additional dwelling supplement, although those with very high value properties above £1million will face higher council tax charges from 2028.

Scottish Association of Landlords chief executive, John Blackwood, said:

“Scotland’s landlords will be disappointed by this budget, in particular by the Finance Secretary’s refusal to rule out the 2p increase on income tax gained from property that we’ve seen elsewhere in the UK.

“The fact that this tax may come into effect in 2027-28, subject to a legislative consent motion, will cause further uncertainty within Scotland’s private rented sector.

“While we do welcome that there will be no rise in the LBTT additional dwelling supplement, this budget still feels to us like a missed opportunity.

“Rather than continuing on this path, Shona Robison should say unreservedly that increases in tax on property income will not happen and give the sector some much-needed confidence to invest.”

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