In the Scottish Budget announced today, the government included changes to the structure of council tax that affect higher-value homes. These changes are part of a broader effort to modernise the system and to give local councils more flexibility in how they set and collect this tax.
New High-Value Bands for Expensive Properties
Under the historic council tax system in Scotland, properties are placed into one of eight bands, A through H, based on their 1991 market value. Band H has been the highest band for decades and applies to properties with estimated values above £212,000 (in 1991 valuations) – a figure that now covers a very broad range of modern property values.
The 2026–27 Budget introduces additional council tax bands above the current Band H for properties with very high values (modern equivalent over roughly £1 million). This is a form of tax progression intended to ensure that owners of the most expensive homes contribute more proportionately.
The new bands are aimed at properties worth more than £1 million in today’s market. Homes in these very high value ranges will be categorised into one of the new top bands, which sit above the existing Band H.
Key features of the new bands:
- New top bands capture properties valued over £1 million.
- These bands sit above Band H and reflect the higher market value of these homes relative to older valuation brackets.
- Local councils will have authority to set the exact levy within these new bands.
This is the first substantive revision of high-end council tax bands in many years. It is designed to make the system less regressive at the top and to spread the tax load more evenly across the full range of property values.
Why This Matters
Under the existing system, a wide range of property values can fall into the same high band (H), due to how long the valuation system has been unchanged. For example, a large family home in a high-price area and a modest property in a lower-price area can both be classed in Band H, even though current market values differ greatly.
By creating additional bands for properties worth over £1 million, the system becomes more finely graduated, so those with the highest-value homes pay more council tax relative to those in lower bands. How much more will vary by local council, because councils set the exact multipliers above the base Band H level.
Recategorising Homes
The Budget also signals the intention to recategorise properties into these new bands based on current value ranges. The process works as follows:
- Properties that exceed defined thresholds (for example, homes worth over £1 million) will be shifted into one of the newly created top bands.
- This recategorisation does not immediately revalue every home, but rather slots them into the correct band based on where their current value sits relative to the thresholds agreed for the new bands.
- Councils will then apply the corresponding council tax rate for that new band.
Importantly, the underlying tax valuation system (still based on historic valuations from 1991) has not yet been fully overhauled across all bands – that would require a full revaluation exercise. What is happening now is a targeted introduction of new upper bands to capture high-value properties.
Flexibility for Local Councils
Local authorities now have greater discretion in setting rates for the new high bands as part of their overall council tax setting each year. This means:
- There is no national cap on how much councils can increase bills within those bands, subject to local decision-making.
- Different councils may set different multipliers for the same band, reflecting local priorities and needs.
- The impact on individual households will depend on both property value and the approach taken by the local council.
These changes aim to give councils more tools to balance their budgets and respond to local cost pressures.
Summary of Key Points
- New council tax bands have been introduced for properties worth over £1 million, sitting above the existing highest band (Band H).
- These bands are intended to make the tax system more graduated at the top of the market.
- Recategorisation means properties that exceed the threshold will be placed into the appropriate new band based on current value.
- Local councils have flexibility to set rates for these bands during their local tax decisions each year.
