Future of council tax in Scotland: consultation

2. Council Tax and Property Changes Over Time

2.1 Changes in Property Values Since 1991

Property values in Scotland have risen significantly since council tax was first introduced using 1991 valuations. On average, the estimated value of a home has increased by 357% across Scotland since 1993. However, this increase has not been the same everywhere.^[33]

In East Lothian, for example, estimates suggest that property values have grown by around 500 percent, while in Aberdeen City the rise has been 168 percent. As of late 2024, it is estimated that the average local property value ranged from around £141,000 in East Ayrshire and West Dunbartonshire to £335,000 in Edinburgh and £330,000 in East Renfrewshire. The national average was approximately £211,000.^[34]

These figures show that the housing market has changed dramatically in the past 30 years, and that property prices in different areas have grown at very different rates, as shown in Figure 4.

[1] The first value for Eilean Siar is for 1997.

Source: Data from Adam et al. (2025), ‘Revaluation and reform of council tax in Scotland: design considerations and potential impacts’, Scottish Government Research Report, Accompanying Excel workbook, Table B.0

2.2 Property Variation, Banding and Valuation Challenges

The uneven growth in property values across the country creates difficulties for a national system that still uses property values from over 30 years ago.

Council tax is based on a banding system, where homes are placed in one of eight bands based on what their estimated value was, or would have been, in 1991. As these bands have not been updated since 1991, many properties are now in bands that no longer reflect their true market value.^[35]

The fixed nature of the banding system also causes other problems. Two homes of similar value may fall on either side of a band boundary and receive very different tax bills. For example, a property at the top of the Band D threshold, and a property at the Band E threshold could be very similar in value but face a council tax bill with an annual difference of almost £500 (see Figure 3).

These issues show that the current system does not keep up with changes in the housing market. Introducing regular revaluations and considering updates to the banding structure could help make the system more accurate and more equitable.

2.3 Fairness and Regressivity in the Current System

One of the main criticisms of the current system is that it is ‘horizontally regressive’, because it is based on outdated property values.^[36] This means that homes with the same current market value can face very different bills depending on where they are located, because the system still relies on property values from 1991. In areas where property values have risen sharply since 1991, households may still be in relatively low bands and paying less than their home’s current value might suggest. In contrast, in areas where prices have grown more slowly since 1991, households may be paying more than they would under a system based on current property values. As a result, the system does not treat similar households consistently across the country.

For example, two homes worth £250,000 today - one in Edinburgh and one in West Dunbartonshire - may still be in different bands because of how their relative value compared in 1991. This means the occupants could be paying different amounts of council tax, despite having homes of equal value in the present day.

Similarly, properties with very different values can fall into the same band and pay the same amount of tax. For example, all homes in Band H are charged the same, even if some are worth hundreds of thousands of pounds more than others.

The current system is also ‘vertically regressive’.^[37] Under the current banding system, households in more valuable homes generally pay more council tax; but not proportionately more. This means that people in lower-value homes often pay a higher share of their property value in tax than those in higher-value homes. This happens because the banding system does not sufficiently increase tax charges in line with property values, especially at the upper end of the scale.

In 2017, the Scottish Government made changes to further increase charges for properties in Bands E to H, which helped to reduce the gap. But the system still does not fully reflect the differences in property value, especially for the most expensive homes.^[38] For example, a Band H property pays only 3.675 times more than a Band A property, even though in 1991 it would have been worth at least 8 times more than a Band A property.^[39]

This creates growing concerns about fairness and whether the current tax system reflects the real value of people’s homes.^[40]

Questions:

1. Do you think the current council tax system in Scotland needs to be reformed?

Yes

No

Don’t know

2.4 Updating the Market Reference Point (Revaluation)

Updating the market reference point used for property valuation would bring council tax into line with today’s property market values. This would mean assigning homes to bands based on their current market value, rather than what they were worth in 1991.

This would help ensure that council tax bills are based on up-to-date information and reflect real-world differences in property value. All of the options presented in this consultation are designed to be revenue neutral. This means that while some households would pay more and others less, the total amount of council tax raised across Scotland would remain broadly the same.

Revaluation could address horizontal regressivity and improve the vertical regressivity described above. It would also add clarity and credibility by ensuring the tax base is up to date.