Scottish Budget 2026: what does it mean for your money?

The Scottish government has published its draft Budget for 2026-27, setting out plans to raise income tax thresholds for lower earners, roll out new childcare support and make changes to council tax, business rates and air travel taxes.

Ahead of the announcement, finance secretary Shona Robison warned that ‘tough’ decisions would be needed to balance tax rises and spending commitments.

Here Which? takes a closer look at the Budget announcement, and how it could impact your money. 

Tax threshold rise 

While income tax thresholds in the rest of the UK will remain frozen until 2031, the Scottish government has confirmed that the basic and intermediate rate thresholds will increase by 7.4% in 2026-27.

This means more of your income will be taxed at the lower rates from April. The Scottish government says that, as a result, around 55% of taxpayers are expected to pay less income tax than they would elsewhere in the UK, where thresholds remain frozen.

Thresholds for the higher, advanced and top rates will remain frozen until at least 2028-29.

• Find out more: UK income tax rates 2025-26 and 2024-25

New 'mansion tax' 

Two new council tax bands will be introduced from April 2028 for the most expensive homes in Scotland.

Properties valued between £1m and £2m will fall into a new Band I, while homes worth more than £2m will be placed in Band J. Fewer than 1% of households are expected to be affected.

The new bands will be based on up-to-date values for high-value properties only, while the rest of the council tax system will remain unchanged.

Robison also said councils should make ‘reasonable decisions’ on council tax, as funding for local government is due to increase by 2% real terms.

• Find out more: council tax calculator 2025-26

Scottish Child Payment boosted to £40 a week

The Scottish child payment – payable to parents in receipt of certain benefits – will increase to £28.20 a week per child from April 2026, in line with inflation, up from £27.16. 

From 2027, the rate will rise to £40 for families with children under the age of one.

Robison says this will help to deliver the ‘strongest package of support for families with young children anywhere in the UK’.

• Find out more: child benefit rates and calculator 2025-26

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More childcare support for families

Parents of younger children are in line to benefit from an expansion of childcare and school-age support.

The Budget confirms funding to deliver a universal breakfast club offer in all primary and special schools by August 2027. Schools will be funded to provide up to an hour of supervision in the morning, helping parents to manage childcare around work.

Additional funding will also be used to expand wraparound childcare, including after-school and holiday provision, with the aim of supporting parents to enter or stay in work while reducing childcare costs.

• Find out more: tax-free childcare and help with childcare costs

Property tax relief for businesses 

From April 2026, the Scottish government will reduce the basic, intermediate and higher property rates for businesses following the next revaluation.

Retail, hospitality and leisure businesses with a rateable value of up to £100,000 will receive 15% rates relief for the next three years, while eligible premises on Scottish islands and in specified remote areas will qualify for 100% relief.

The Small Business Bonus Scheme will also continue for the next three years, removing around 100,000 properties from business rates altogether. Transitional reliefs will be introduced to limit sharp bill increases resulting from revaluation.

If additional resources come to Scotland as a result of changes made to business rates for pubs in Westminster, Robison said 'further support' would be made available in Scotland.

Land and Buildings Transaction Tax (LBTT) – which works in a similar way to stamp duty in England and Northern Ireland – will remain unchanged, meaning buyers will pay the same rates when purchasing a home in Scotland.

• Find out more: small business tax: what you need to pay

Private jet tax confirmed 

The Scottish government confirmed that Air Departure Tax (ADT) will be introduced from April 2027, replacing UK Air Passenger Duty for flights departing Scotland.

Rates will initially match those charged elsewhere in the UK, but a new private jet supplement will be added from 2028-29. Ministers say this reflects the higher emissions associated with private flights. 

Ministers also said they will seek further devolution to address so-called ‘ghost flights’. Commercial passengers will not see any immediate change to flight taxes under the plans.

Social care workers to get real living wage

Those working in adult social care will be paid at least the Real Living Wage from April 2026.

The rate is set annually and currently stands at £13.45 an hour, compared with the UK national minimum wage of £12.21 an hour.

Overall, Scotland has announced a record £22.5bn for health and social care – including £17.6bn for NHS boards and resources for a national rollout of walk-in GP clinics. 

The Budget documents state: 'Investment across the NHS estate to modernise infrastructure and maintain and improve essential facilities will ensure resilience across services and properties.'

• Find out more: care home costs

What happens next?

The Scottish Parliament will now debate the draft Budget, and Members of the Scottish Parliament (MSPs) will vote on whether to approve the plans.

If approved, most measures will come into force from April 2026, with some tax changes phased in later.

As the Scottish National Party does not have a majority at Holyrood, support from other parties will be needed for the Budget to pass. However, the Scottish Labour Party has said it will not block the Budget.