Council Tax High-Value Property Bands (Mansion Tax): consultation

2. Background and Context

2.1 Council Tax in Scotland

Council Tax is a local tax on domestic properties. It is paid by households across Scotland, with over 2.5 million chargeable dwellings, and helps fund a wide range of important local services including schools, social care, roads, libraries and waste collection.^[3] In 2026–27, Council Tax is expected to raise around £3.5 billion net revenue for local government across Scotland.^[4]

Over recent years, Council Tax income has made up around 19 percent of the total general funding available to local government, approximately similar to income from non-domestic rates (NDR) which is a property-based tax charged to businesses and the public and third sectors. The largest share of local government funding (over 60 percent) comes from the General Revenue Grant, which is paid by the Scottish Government. The rest comes from other local income sources such as taxes, fees and charges.^[5]

All homes are placed into one of eight Council Tax property valuation bands, from Band A to Band H.^[6] These bands are based on what the property would have been worth on 1 April 1991, a date known as the market reference point.^[7] The valuation of each home into the property bands, is carried out by independent local Assessors, who maintain the Valuation Lists for each council area.^[8]

Each of Scotland’s 32 local authorities is responsible for setting the Band D rate in their area and for managing the administration of Council Tax. This includes issuing bills, collecting payments, and applying any discounts, exemptions or reductions. While the system is defined by national rules, it is operated locally, which means that the amount paid by households in the same band can vary depending on where they live.^[9]

The amount a household pays depends on several factors:^[10]

• the valuation band assigned to the property (e.g. a home in Band A will have a lower Council Tax charge than a home in Band D);
• the Band D rate set by the local council;
• any discounts, such as the 25 percent discount for single adult households; and
• any exemptions, such as for student households.

The banding structure (Bands A to H) has remained unchanged since Council Tax was introduced over 30 years ago. Although the banding system has not changed since Council Tax was introduced in 1993, some adjustments were made in 2017 to increase charges for properties in Bands E to H.^[11]

The bands themselves are fixed nationally, but each council decides how much to charge for Band D. The tax charged for the other bands is set using fixed ratios in relation to Band D.^[12]

The table below shows the current band structure and average tax charges across Scotland for 2026–27.

Source: Council Tax Base (CTAXBASE), Council Tax Assumptions (CTAS)

Share of dwellings in each band (2025-26) and average bills (2026-27) calculated using data from the Scottish Government Council Tax Datasets

2.2 The case for change at the top of the system

In the current system, properties worth several million pounds can face a Council Tax bill that is only marginally higher than a property worth a fraction of that amount. For example, under the current system, there are circumstances where a multi-million-pound home in Band H could face a Council Tax bill less than £1,000 more than a property worth one-tenth of its value in Band G.

There are two related causes for this that are rooted in the design and age of the current system:

• The first is that the difference in charges between bands in the existing system are not necessarily significant for those at the top of the property distribution. Band H includes properties with a broad range of values - any property worth more than £212,000 as at 1991. These properties have a tax rate of 2.45 relative to Band D (i.e. 2.45 times the Band D charge). That single rate applies to all properties in Band H, even those that are at the higher end of property value distribution.^[13]
• The second is that there has been no general revaluation since 1991, so the band a property is placed in for Council Tax reflects what it was estimated to be worth on 1 April 1991, not its value today. The property markets across Scotland have changed substantially and unevenly between 1991 and the present day.^[14] Consequently, a property could sit in a much lower Council Tax Band, based on 1991 values, while being worth considerably more in today's market than a property currently in Band H. Similarly a property in Band G or H may have grown in value very slowly since 1991, and would sit in a much lower Band were the system based on recent market valuations.^[15]

This feature of the current system weakens the link between property value and tax liability.

2.3 Commitment and Reform

To address this, Scottish Ministers announced in the Scottish Budget 2026–27 that they would introduce two new Council Tax bands above band H for properties in Scotland worth over £1 million (a “Mansion Tax”).

That commitment does not affect the Scottish Government's consideration of broader reform. A separate programme of engagement on longer-term Council Tax reform was undertaken in the last Parliament. The Future of Council Tax in Scotland consultation explored a broad range of options for reform of the whole system. Any decisions on broader change will be taken as part of cross-party discussions with local government. The new high-value bands do not pre-judge the outcome of that work.

2.4 Operating Within The Existing System

The new bands will operate entirely within the existing Council Tax framework. Council Tax in Scotland is a charge on occupation, and this will continue to be the case for Band I and Band J properties. This means that existing protections, such as discounts, exemptions and the Council Tax Reduction scheme, will continue to apply in the usual way.