In a move mirroring recent UK government policy, the Scottish National Party (SNP) has announced its own version of a 'mansion tax', targeting the country's most expensive homes. Finance Secretary Shona Robison used her Budget statement to unveil the creation of two new council tax bands, set to take effect from April 2028.
The Details of the New Property Levy
The new structure will introduce Band I for homes valued between £1 million and £2 million, and Band J for all properties valued over £2 million. This follows Chancellor Rachel Reeves's announcement of an annual surcharge on £2 million homes in England, also starting in 2028. Ms Robison stated the changes would involve a targeted revaluation, aiming to leave the majority of properties unaffected.
The Scottish Government estimates the new bands will apply to roughly 11,000 properties, representing less than 1% of the housing market. The measure is projected to raise approximately £16 million annually. Despite this being a fraction of the £3 billion generated by existing council tax bands, Robison argued it would "bring greater fairness as well as increased revenues to councils".
Broader Council Tax Hikes and Local Authority Funding
The announcement on high-value homes comes against a backdrop of wider council tax pressures for Scottish households. For the second consecutive year, local authorities have been given free rein to set their own rates. Last year, this led to an average rise of 9.6%, pushing the average Band D bill to £1,543.
Ms Robison expressed a hope that councils would be "reasonable" this year, a plea she also made last year before significant hikes were implemented. She told MSPs that overall funding for local government would increase by 2% in real terms, calling it a "fair" settlement. However, a recent survey by the Local Government Information Unit found all 26 responding councils planned to raise council tax and cut spending to balance their books in 2026/27.
Expert Warnings and Political Reactions
Financial experts were quick to analyse the implications. Stephen Cotter of Rathbones wealth management group said, "The Finance Secretary has effectively introduced Holyrood’s version of a mansion tax." He warned the announcement alone could distort activity at the top end of the market, potentially creating "price cliffs" at the valuation thresholds and discouraging transactions and renovations. This, he cautioned, could slow housing market activity and ultimately reduce overall tax revenues.
Chris Barber from the Institute of Chartered Accountants Scotland noted the policy mirrored the UK model and was a "welcome first step" towards long-promised council tax reform. However, he criticised the timing, stating it came before a full consultation on council tax had concluded, limiting proper scrutiny.
Scottish Green co-leader Ross Greer took credit for the mansion tax and other left-wing policies in the budget. Meanwhile, council umbrella body Cosla stressed that local authorities must be involved in shaping the policy and reiterated that the budget did not deliver an additional £750 million they had sought for social care pressures. Council leaders are set to discuss the Budget at a special meeting.
