Council Tax
Council Tax is a local tax that contributes towards the funding of local public services annually. For 2022-23 £2.728 billion of council tax was collected.
Each individual council sets the rate that applies in their local authority area, administers, and collects the tax, and determines how the receipts are used to fund local services. The Scottish Ministers and the Scottish Parliament are responsible for the legislation that defines Council Tax.
On this page you can read about:
- how Council Tax works
- roles
- Council Tax reduction scheme
- second homes and unoccupied properties
- Council Tax reform
- consultations
How council tax works
Introduced in 1993 by the Local Government Finance Act 1992, Council Tax is a system of property taxation that is levied locally on each domestic property in Scotland.
The amount charged on each property is calculated based on its assigned valuation band, from A (lowest) to H (highest), based on its relative property value.
Councils set the Band D rate for their local authority area, with the charges for properties in other bands (A – C and E – H) being a fixed proportion of that Band D charge. Those proportions apply nationally and are set out in law.
Some types of property are exempt from Council Tax, while discounts and the means-tested Council Tax Reduction scheme may reduce the amount payable.
Council Tax is not a charge for services used by any individual. The money raised contributes directly to the delivery of local public services provided by each local authority and is spent in the district in which it is raised.
Roles
Local authorities
Each local authority is responsible for the administration and implementation of Council Tax, as well as how receipts are spent within its local authority area. This includes the determination and calculation of liability, billing, collection, and enforcement of amounts payable.
Local authorities are also responsible for implementing all Council Tax discounts and exemptions, and applying means-tested reductions through the Council Tax Reduction scheme.
Scottish Assessors
Each of the 14 local Scottish Assessors is responsible for valuing properties for Council Tax purposes in the local authority district(s) they serve. They assign each property in Scotland to one of eight valuation bands, from A (lowest) to H (highest), based on its relative property value.
Local Taxation Chamber
Where a liable party disputes the valuation band allocated to a property, the Local Taxation Chamber of the First-tier Tribunal for Scotland can hear appeals and make a final determination regarding council tax banding.
The Local Taxation Chamber can also hear appeals of other aspects of council tax, such as the calculation of council tax liability and entitlement to exemptions and discounts.
Read more information about appeals and the Local Taxation Chamber
Council Tax reduction scheme
Our means-tested Council Tax Reduction (CTR) scheme reduces or eliminates the council tax liability of around 450,000 lower income households in Scotland, depending on household circumstances and ability to pay. See data on the numbers of CTR recipients and the income forgone for all local authorities from April 2013.
By the end of financial year 2023 to 2024, we will have invested just under £4 billion in CTR since it was established in 2013-14.
Responsibility for administering the CTR scheme rests with local authorities. Anyone who thinks they might be eligible for a reduction under the CTR scheme should contact their local authority.
Second homes and unoccupied properties
Second homes
For Council Tax purposes, a second home is a property which is no-one's main residence, but which is occupied for at least 25 days a year. Each council has discretion to apply a discount of between 10% and 50% on second homes or may choose to apply no discount. Job-related dwellings or purpose-built holiday homes must have a 50% discount applied.
Unoccupied properties
Councils have discretion to vary the council tax payable on unoccupied properties. Initially a discount of between 10% and 50% is required, but after a property is unoccupied for 12 months (or 24 months if being actively marketed for sale or let), an increase of up to 100% may be imposed to encourage owners to bring empty homes back into use.
Revenue generated by variation in council tax liability
Revenue generated from applying Council Tax discounts of between 50% and 10% on second homes and long-term unoccupied properties is reserved for spending that supports the provision of new affordable housing. Any additional revenue raised from further reduced discounts, or applying a levy, can be used as the local authority sees fit.
More information on local authorities' discretionary powers to vary the Council Tax on these properties can be found in the Council Tax on second and long-term unoccupied homes: guidance.
Council Tax reform
We are committed to a fairer, more inclusive, and fiscally sustainable form of local taxation.
Scottish Ministers convened the Joint Working Group on Sources of Local government Funding and Council Tax Reform. The group has representation from Scottish Greens and COSLA and will consider proposals for meaningful changes to be introduced to Council Tax, including deliberative engagement on longer-term reforms to the system.
The group endorsed joint consultations on:
- the Council Tax treatment of Second and Long-term Empty homes and thresholds for self-catering properties liable for non-domestic rates
- the Fairness of the Council Tax system, which concerns the council tax charges (also referred to as multipliers) for properties in valuation bands E to H
Consultations
Consultation on Council Tax on Second homes and Empty homes
We are committed to ensuring local areas have the tools and powers they need to take action to make the best use of existing housing stock.
On 17 April 2023, we announced a joint public consultation with COSLA on proposals to give councils additional powers to increase council tax on second homes and empty homes, as well as considering whether the current non-domestic rates thresholds for self-catering accommodation remain appropriate.
This consultation closed on 11 July 2023. We are analysing the repsonse to inform future policy in this area.
Consultation: A Fairer Council Tax
We are committed to a fair and sustainable local tax system. The Fairer Council Tax consultation seek views as to whether those in properties in the highest bands should be making a greater contribution, where they can afford to do so.
This consultation opened on 12 July 2023, and will run until 20 September 2023. The consultation and supporting documents set out the wider policy context of the proposal and the case for change.
You can respond to this consultation on our consultation hub Citizen Space.
We will analyse all consultation responses and reflect them before finalising any decisions.