Article last updated 20 January 2026.
SummaryScotland’s latest Budget, announced on 13 January 2026, comes at a time of competing priorities: improving public services, managing tight finances and responding to uncertainty across the UK tax landscape. So, what does this mean for households, investors and anyone planning for the long term? Our Scotland-based specialists have reviewed the key changes and what they could mean for you. |
A budget built on trade-offs
The Scottish government is introducing £1.5bn in savings through public-sector reforms while asking higher earners to contribute more. New measures include a private jet levy and additional council tax bands for high-value properties.
Angus Kerr, Head of Scotland at Rathbones’ Glasgow office, explains: “Ministers are walking a tightrope – protecting essential services while managing a shrinking capital budget in a highly uncertain environment.”
Income tax: Relief for lower earners
One of the biggest surprises is a move away from Westminster’s approach. While the UK Government continues to freeze thresholds, Scotland will raise its basic and intermediate rate tax thresholds above inflation. Exact figures will be confirmed later.
Kindar Brown, Senior Financial Planner at Rathbones’ Edinburgh office, says: “This is a real-terms tax cut for low and middle earners. Many Scots will pay less tax than those in similar brackets elsewhere in the UK.”
Higher, advanced and top-rate thresholds remain unchanged however, so higher earners will still feel the impact of Scotland’s progressive tax model.
Council tax: New bands for high-value homes
From 2028, two new council tax bands will apply to properties worth £1mn or more. Stephen Cotter, Financial Planning Area Lead at Rathbones’ Glasgow office, calls this “Holyrood’s version of a mansion tax.”
The government has yet to confirm how valuations will work, which could influence buying and selling decisions well before the changes take effect.
Dividend and property income: Mixed messages
Westminster has confirmed a 2% rise on dividend income from April 2026, with further increases on savings and property income from April 2027. Scotland will raise the rate of dividend tax from April 2026 and the rate of savings income from April 2027. The UK Finance (No 2) Bill allows the Scottish government to set their own property income tax rate. However, no change to property income tax was announced. This will offer some relief for landlords and tenants.
Scottish households will need to prepare for the combined impact of decisions made on both sides of the border.
Looking forward
The 2026 Budget offers support for lower earners while introducing measures aimed at long-term sustainability. For higher earners and those with significant property or investment income, the implications are more complex.
As the political and economic landscape evolves, expert guidance will be key. Rathbones will continue to monitor developments across the UK and Scotland to help you plan with clarity and confidence.
Ready to make a plan?
The Scottish Budget highlights a familiar challenge: managing two tax systems. With separate rules for income tax, property tax and reliefs – and possible UK-wide reforms still on the horizon – careful planning is essential.
At Rathbones, we’re already helping clients understand these changes and what steps they can take now.
A personalised financial plan is more important than ever. It can help you protect your wealth, support your lifestyle and enjoy life after work with greater peace of mind. Talk to your Rathbones contact or fill out our form to find out how we can help.
This information is based on our current understanding of HMRC tax regulations in the UK. Tax treatment depends on your individual circumstances and may be subject to change in future.