Income tax 

The Scottish government has the power to set income tax rates and bands for the non‑savings, non‑dividend income of Scottish taxpayers. 

At the Budget on 4 December 2024, the Scottish government announced that the starter rate band will increase by 22..6%, and the basic rate band by 6.6% for 2025/26. No changes will be made to the rates of tax or to the higher, advanced and top rate bands. 

*Assumes individuals are in receipt of the standard UK personal allowance. 

**Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000. 

The Scottish government also made the following commitments for the remainder of the Parliament: 

• it will not introduce any new bands or increase the rates of Scottish income tax;
• it will maintain its commitment that over half of Scottish taxpayers will pay less income tax than they do in the rest of the UK; and
• it will uprate the starter and basic rate bands by at least inflation. 

Land and buildings transaction tax (LBTT) 

The Scottish government announced that it will: 

• maintain residential and non-residential rates and bands at their current levels. First-time buyer relief will continue to be available;
• increase the additional dwelling supplement (ADS) from 6% to 8% for land transactions with an effective date on or after 5 December 2024. ADS is charged on buying an additional residential property (dwelling) in Scotland. The statutory instrument that legislates for the change in rate provides that the increase does not apply to transactions for which legal missives were signed on or before 4 December 2024;
• conduct a review of LBTT. This will begin in spring 2025 by considering various aspects of the residential and non-residential arrangements for LBTT to ensure their policy intent continues to be met;
• publish a consultation on draft legislation to provide relief from LBTT on the exchange of units within co-ownership authorised contractual schemes (CoACS) investing in Scottish property;
• consult to seek views on the case for introducing a LBTT relief for the seeding of properties from existing unauthorised investment vehicles into property authorised investment funds (PAIFs) and CoACS; and
• legislate to provide additional clarity on the clawback arrangements for sub-sale development relief and to provide for the availability of LBTT group relief in instances of non-partition demergers. 

Other announcements 

Announcements made on other areas include the following: 

• Scottish landfill tax. The standard and lower rates will increase from 1 April 2025 so that they are consistent with the UK landfill tax rates for 2025-26.
• Non-domestic rates. The basic property rate will be frozen, and the other rates will rise in line with inflation. The small business bonus scheme and the business growth accelerator reliefs will be maintained, and the Scottish government will offer a 40% per cent relief in 2025/26 to properties in the hospitality sector. 
• Air departure tax (ADT). The Scottish government remains committed to introducing ADT and continues to consider options to implement the tax. The UK-wide air passenger duty will continue to apply in Scotland until ADT is implemented.
• Scottish aggregates tax. The Scottish government intends to introduce a Scottish aggregates tax on 1 April 2026. 

The Scottish government continues to consider the introduction of new taxes, including a building safety levy, a cruise ship levy and a carbon land tax.  

Tax strategy 

Alongside the Budget, the Scottish government published a strategy document setting out its medium-term ambitions for how the tax system should develop to support the delivery of the government’s priorities. In addition to some of the commitments referred to above, the document includes the government’s priorities and actions for the administration of the tax system, including increasing public understanding of tax and strengthening tax compliance.  

Further reading 

• Scottish Budget 2025 to 26, Chapter 2: Tax policy