Future of council tax in Scotland: consultation
This consultation seeks views on how Scotland’s council tax system could be made fairer and more up to date. It explores illustrative models such as revaluing properties, adjusting tax bands and introducing protections to help households manage any changes to their bills.
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73 days to respond
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3. Options for Council Tax Reform
3.1 Revaluation of Property Values
3.1.1 How a Revaluation Would Work
A revaluation would update the council tax system and replace the 1991 valuations, thereby ensuring that council tax property bands reflect contemporary market conditions. The work would be carried out by Scottish Assessors.
Once properties are revalued, they would be assigned to council tax bands based on their new value. This could be done using the existing band structure (eight bands), or alongside changes to the number of bands and how charges are applied between them.
A revaluation on its own would not increase the total amount of council tax collected across Scotland. It would only reassign properties into new banding thresholds. Revaluation options can be designed to ensure that the total amount of revenue raised nationally stays broadly the same. This means changes can be revenue neutral.
3.1.2 Why Consider Revaluation
While revaluation alone would not resolve every concern about council tax, it is a necessary first step to making the system more accurate, proportionate and credible.
Revaluation could also create the foundation for other improvements to the council tax system, such as changes to banding, tax rates or the council tax reduction scheme. Without revaluation, these wider reforms would continue to operate on outdated property information, limiting their fairness and effectiveness.
Importantly, a national revaluation can be designed to be revenue neutral across Scotland. This means that, while some households may see their bills rise and others fall, the overall amount of money raised through council tax in Scotland would stay broadly the same.
While the revaluation and banding options presented in this consultation are designed to be revenue neutral at the national level, there are important caveats to note. The modelling assumes that grant funding from the Scottish Government would be fully adjusted to reflect changes in what each council could raise under a reformed system. Without such adjustments, some councils might gain or lose revenue depending on the structure of their local housing market. In addition, the analysis assumes that councils maintain their existing Band D rates and that household behaviour - such as payment patterns or eligibility for reductions - remains unchanged. These assumptions help isolate the underlying effects of the reform options, but actual outcomes may vary depending on how the changes are implemented.[41]
Questions:
2. Do you think property values used to calculate council tax should be updated to reflect current market values, instead of using 1991 values (i.e. should there be a revaluation of every property in Scotland)?
Yes
No
Don’t know
3.1.3 Frequency and Future Cycles
For any property tax system to remain accurate and equitable over time, it needs to be supported by an updated tax base. This means a regular schedule for property revaluation, such as every five or ten years.
One of the main reasons the current council tax system has become so out of date is that there has never been a revaluation since it was introduced. Over time, this has allowed inconsistencies to build up in how much households pay relative to the current value of their homes, both within and between local areas.[42]
To avoid this in future, the system could include a regular revaluation cycle, for example every five or ten years. Regular updates would keep the tax base, and the banding thresholds, aligned with housing market changes and reduce the need for large adjustments later on.
This would improve the credibility of the system, by ensuring that it remains aligned with changes in property values over time.
A full revaluation exercise may be resource-intensive at first, the scale of that task reflects the length of time since the last revaluation. Once an up-to-date valuation base is established, future revaluations could be delivered more efficiently and at lower cost, particularly if supported by improved data and digital systems. However, revaluing too frequently could bring diminishing returns and create unnecessary administrative burden. In non-domestic rates in Scotland the system now relies on a three-yearly revaluation cycle. Such frequency may not be necessary for domestic property, but keeping valuations relatively current without placing undue pressure on assessors or billing authorities would be prudent. In Wales, the Welsh Assembly has agreed to implement a five yearly revaluation from 2028.[43]
Questions:
3. How often do you think property values should be reviewed and updated for council tax purposes?
Every 3 years
Every 5 years
Every 7 years
Every 10 years
Other, please specify [50 words maximum]
Don’t Know
3.2 Revaluation Models: National and Localised Approaches
3.2.1 Overview of Revaluation Approaches
There are different ways a revaluation of property values could be carried out as part of council tax reform, these include:
- A national revaluation, which applies the same valuation bands across all council areas in Scotland.
- A localised revaluation, where valuation bands are set separately for each council based on local property markets (i.e. 32 local property markets).
In both cases, properties would be revalued using a consistent national methodology, carried out by the independent Scottish Assessors. What differs is how the band thresholds would be set - either consistently across Scotland or tailored to local areas.
This section outlines how each approach would work and the potential impacts and trade-offs of each approach.
The modelled options presented later are all based on a national valuation approach, as this provides a consistent framework for comparing different reforms and allows clearer analysis of how changes to banding and tax rates would affect households across Scotland. It also aligns with the structure of the current system, making it a more practical basis for developing and testing illustrative reform scenarios.
3.2.2 Description of the National Model
In the national model, all properties would be valued and placed into bands based on nationally fixed thresholds. These thresholds would apply uniformly across all 32 councils, so that properties of similar value are placed in the same band no matter where in Scotland they are located.
The band structure used could remain as it is (with Bands A to H), or it could be updated as part of a wider reform programme by adding more bands. The bands themselves would continue to be fixed nationally, but each council would decide how much to raise the tax by – which is done by increasing the middle rate (Band D currently). The tax charged for the other bands would continue to be set using fixed ratios in relation to Band D.
Under a national revaluation, the biggest changes in band placement would occur in areas where property values have risen fastest (e.g. Edinburgh, East Lothian) and slowest (e.g. Aberdeen, Inverclyde) since 1991. In contrast, areas where prices have grown at approximately the national average, such as Fife and South Lanarkshire, would see fewer changes.[44] This would help to bring bills more in line with current market conditions and reduce long-standing imbalances between areas.
This model offers a familiar structure, and a clear and consistent way to update the tax base so that council tax bills better reflect up-to-date property values and are applied evenly across the country.
3.2.3 Description of the Localised Model
Under a localised revaluation, properties would still be valued using national methods, but each council would have its own unique set of valuation thresholds to reflect the local property market. As such, properties would be assigned to bands according to their local valuation thresholds, which could be determined by the 14 Scottish Assessors for each of the 32 local authority areas. This means that the value range for Band A, Band B and so on would differ by council area, based on local house prices.
The aim of this approach is to remove the influence of national property values on banding thresholds. This means that households are taxed based on their relative position in the local housing market rather than a single national scale. This approach might reduce the number of properties moving into higher bands in more expensive areas, and reduce the number of properties moving into lower bands in less expensive areas. However, it would also mean that two homes with the same value could end up in different bands, and pay different tax, depending on where they are located in the country.
For example, a £200,000 property in the City of Edinburgh is likely to fall into a lower band than a similarly priced property in West Dunbartonshire, due to its value being lower compared to the average value of other properties in the City of Edinburgh area. The table (Figure 5) below is an illustration of potential differences between hypothetical properties with similar values in different councils.[45] This is driven by variations in both local band D charges and local band thresholds.
| Council | Hypothetical Property Value | Band | Bill (based on average bill nationally) |
|---|---|---|---|
| City of Edinburgh | £200,000 | B | £1,200 |
| East Lothian | £200,000 | C | £1,372 |
| West Dunbartonshire | £200,000 | D | £1,543 |
A data table showing examples of bands and council tax bills for hypothetical property values in different council areas under a localised revaluation model.
Source: Scottish Government calculations using data from House price statistics - Registers of Scotland and Council tax datasets - gov.scot
The map below (Figure 6) shows the variation in mean property value across Scotland, illustrating the stark differences in the council tax property band thresholds that would exist between local areas in a localised revaluation model. Estimated average property values for each council area in Scotland are included in Annex A of this document.
In some cases, properties may be placed in lower bands than properties with lower values that are in other council areas. A property valued at around £200,000 in West Dunbartonshire or East Ayrshire for example, could pay less than a property valued at 25% more in Midlothian.
| Council | Hypothetical Property Value | Band | Bill (based on average bill nationally) |
|---|---|---|---|
| Midlothian | £250,000 | C | £1,372 |
| East Ayrshire | £200,000 | D | £1,543 |
| West Dunbartonshire | £200,000 | D | £1,543 |
| Aberdeen City | £240,000 | E | £2,027 |
A data table showing council tax bands and bills for hypothetical property values in different council areas under a localised revaluation model.
Source: Scottish Government calculations using data from House price statistics - Registers of Scotland and Council tax datasets - gov.scot
3.2.4 National or Local Revaluation - Strengths and Limitations
Administrative and Policy Considerations
A national revaluation is simpler to explain and administer. Everyone is subject to the same banding thresholds, and the system is easier to communicate and understand. It supports national consistency and reduces the risk of confusion or appeals.
A localised model, by contrast, would be more complex to deliver. Each council would need its own set of band thresholds, creating challenges for assessors, billing systems, and public engagement. It could also increase appeals, particularly in areas near council boundaries where neighbours with similar properties face different tax bills. In addition, in areas with lower overall property values (or generally higher values) banding thresholds would be compressed with little variation between them. For example, the difference between the lower band and the middle bands could be a smaller difference in valuation.
Introducing localised thresholds could also complicate future reforms due to 32 variations of valuations thresholds.
Consistency Across Scotland
A national revaluation provides consistency by applying the same band thresholds across all council areas. This means that properties of the same market value are treated equally, regardless of location. For taxpayers, this strengthens the ‘horizontal’ equity – we know that when two properties of the same value are not in the same council tax property band based on geography this is perceived as unfair.[46] It also makes council tax easier to understand and explain, as the rules are the same everywhere.
Tailored to Local Areas
Under a localised revaluation, properties would be placed in bands based on how their value compares to others locally. This approach may appear to be more tailored to local housing markets, particularly in places where most homes currently fall into just one or two bands under the national model. However, it could exaggerate a spread across bands based on small valuation differences (i.e. a Band C and Band E could be separated by a much smaller valuation difference) in areas where most properties are currently very similar in value.
Differences Between Similar Homes in Different Places
A key concern with localised revaluation is that households with similar-value properties in different parts of Scotland could end up in different bands and pay different amounts of council tax. This could be especially noticeable at council boundaries, where similar homes on opposite sides may face very different bills. Such differences may be seen as arbitrary and could weaken confidence in the system.
Complexity and Transparency
Varying band thresholds across 32 council areas would make the council tax system harder to explain and understand. It may be more difficult for households to work out how their bill has been calculated or to compare it with others. For councils and assessors, the shift to localised banding would also bring administrative challenges.[47] This includes more complex IT systems, additional staff training, and potentially more appeals or disputes.
Long-Term Deliverability and Reform
A national system with consistent bands may provide a more stable base for future reforms. It is easier to maintain, communicate, and update over time. By contrast, localised thresholds could introduce long-term complexity. Future reforms would need to account for 32 separate banding systems, which could make changes more time-consuming and more difficult to coordinate.
Alternatives to Localised Revaluation
While a localised system aims to make council tax more responsive to local conditions, there may be other ways to achieve this without creating added complexity. For example, increasing the number of bands nationally, and adjusting how much more is paid in higher bands, could improve how well the tax reflects differences in property values across the full range of the housing market.
Questions:
4. Following a revaluation, do you think council tax band property value thresholds should be set at a national level or vary by council area?
Thresholds should be set nationally to be the same across all council areas
Thresholds should vary by council area based on local housing markets
Don’t know
3.3 National Revaluation Models
The Institute for Fiscal Studies (IFS) has modelled several reform options that use a national revaluation as their foundation. These options aim to update property values across Scotland and explore how changes to the number of bands or the way council tax is calculated might affect households, councils, and the overall distribution and progressivity of the system.[48]
Each of the models is revenue neutral, and therefore the total council tax revenue would remain broadly the same. The different models explored in this consultation vary in how they redistribute tax liability across the property market. Some focus on increasing progressivity, meaning that households in higher-value homes would contribute a larger share of the overall council tax collected. Others aim to increase differentiation, by adding more bands to provide more incremental steps in the tax rates between properties of increasing market values. For example, a system with more bands and smaller gaps between them would result in more gradual changes to bills as property values rise. While all the models are based on updated property values as their starting point, they differ in how sharply they adjust tax contributions at the upper end of the market and how finely they distinguish between properties across the full value range.
Questions:
5. Which of the following is most important to you in the design of council tax bands?
Ensuring tax rises between bands are gradual and predictable (differentiation)
Ensuring households in higher-value homes contribute more (progressivity)
Don’t know
Other [Open Text Box]
3.3.1 Illustrative Reform 1 - Revaluation with the Current 8-Band System
This approach is a revaluation without any changes to the current 8-Band System. This updates the value of all properties but keeps the current eight-band structure in place. The main change is that properties are reassigned to bands based on current property values rather than 1991 values.
Band thresholds are adjusted to reflect how property prices have increased since 1991. For example, it is estimated that the threshold for Band A would rise from £27,000 to about £97,000, and Band D would increase from £58,000 to around £255,000.[49]
While the tax structure would stay the same, this realignment would move many properties into different bands, correcting distortions developed over the course of over 30 years of change in the housing market. However, the system would remain regressive overall - higher-value properties would still pay less council tax as a proportion of their value than lower-value properties.
| Band | Upper threshold | Relative tax rate | Tax rate (2025-26) | % of properties |
|---|---|---|---|---|
| A | £97,060 | 0.667 | £1,029 | 20.02 |
| B | £148,147 | 0.778 | £1,200 | 22.22 |
| C | £197,575 | 0.889 | £1,372 | 16.14 |
| D | £255,106 | 1 | £1,543 | 13.9 |
| E | £347,197 | 1.314 | £2,027 | 13.75 |
| F | £469,277 | 1.625 | £2,507 | 8.2 |
| G | £892,084 | 1.958 | £3,022 | 5.22 |
| H | ∞ | 2.45 | £3,780 | 0.54 |
A data table showing new band thresholds and relative tax rates under a revaluation.
Source: Adam et al. (2025), ‘Revaluation and reform of council tax in Scotland: design considerations and potential impacts’, Scottish Government Research Report
Note: there were over 2.5 million properties in Scotland as of September 2024. (2,602,545).[50]
3.3.2 Illustrative Reform 2 - Differentiated 12-Band System
This 12-band differentiated system updates property values and adds more bands to create a more gradual increase in council tax across property types. This means it introduces smaller increases in tax between bands to reduce the large jumps in between some of the tax bands in the current system. It also reduces the tax rate for the lower value properties and increases the rate for higher value properties, compared to the current 8-band system.
Key changes include:
- Splitting existing bands E and F into smaller bands (E1 to F2)
- Adding a new lower band (A1) and a new upper band (I)
Under this system, households in the lowest-value properties (Band A1) would see a reduced council tax rate equivalent to a reduction in bills of around £170 less a year, based on average 2025-26 council tax charges across Scotland. Homes in Bands A2 to C would also see smaller reductions equivalent to around £50 less a year. At the upper end, properties in the new Band I would see increased rates equivalent to around £850 more per year, based on 2025-26 charges.[51]
While this model makes modest improvements in making the system less regressive, its main aim is to reduce large jumps in tax at the boundaries between bands.
| Band | Upper threshold | Relative tax rate | Tax rate (2025-26) | % of properties |
|---|---|---|---|---|
| A1 | £65,000 | 0.556 | £857 | 5.45 |
| A2 | £95,000 | 0.639 | £986 | 13.6 |
| B | £135,000 | 0.75 | £1,157 | 18.02 |
| C | £185,000 | 0.861 | £1,329 | 17.62 |
| D | £250,000 | 1 | £1,543 | 16.54 |
| E1 | £305,000 | 1.225 | £1,890 | 9.6 |
| E2 | £375,000 | 1.475 | £2,275 | 7.8 |
| F | £460,000 | 1.725 | £2,662 | 5.21 |
| G1 | £560,000 | 1.975 | £3,047 | 3.04 |
| G2 | £845,000 | 2.25 | £3,433 | 2.43 |
| H | £1,265,000 | 2.556 | £3,943 | 0.55 |
| I | ∞ | 3 | £4,629 | 0.14 |
A data table showing new band structures and relative tax rates under a 12-band differentiated system
Source: Adam et al. (2025), ‘Revaluation and reform of council tax in Scotland: design considerations and potential impacts’, Scottish Government Research Report
3.3.3 Illustrative Reform 3 - Progressive 12-Band System
The Progressive 12-band system uses the same 12-band structure as above and also adjusts the tax rates to make the system more progressive, decreasing tax rates more significantly for lower value properties and increasing tax rates more significantly for higher value properties.
Compared to the previous 12-band model, the tax burden would shift more clearly from lower-value to higher-value properties:
- Bands A to C would face even lower rates, equivalent to an estimated reduction in bills of between around £85 and £170, based on average 2025-26 council tax charges across Scotland.[52]
- The increased rate applied to households in Band I (the highest-value band) would have been equivalent to an estimated £1,600 more per year in 2025-26.[53]
The aim of this model is to make council tax more equitable by ensuring that higher-value homes contribute a greater share of the total tax.
| Band | Upper threshold | Relative tax rate | Tax rate (2025-26) | % of properties |
|---|---|---|---|---|
| A1 | £65,000 | 0.556 | £857 | 5.45 |
| A2 | £95,000 | 0.611 | £943 | 13.6 |
| B | £135,000 | 0.667 | £1,029 | 18.02 |
| C | £185,000 | 0.806 | £1,243 | 17.62 |
| D | £250,000 | 1 | £1,543 | 16.54 |
| E1 | £305,000 | 1.25 | £1,929 | 9.6 |
| E2 | £375,000 | 1.525 | £2,353 | 7.8 |
| F | £460,000 | 1.85 | £2,855 | 5.21 |
| G1 | £560,000 | 2.2 | £3,395 | 3.04 |
| G2 | £845,000 | 2.6 | £4,012 | 2.43 |
| H | £1,265,000 | 3 | £4,629 | 0.55 |
| I | ∞ | 3.5 | £5,401 | 0.14 |
A data table showing new band structures and relative tax rates under the Progressive 12-Band System.
Source: Adam et al. (2025), ‘Revaluation and reform of council tax in Scotland: design considerations and potential impacts’, Scottish Government Research Report
3.3.4 Illustrative Reform 4 - 14-Band System
The 14-Band Progressive System builds on the 12 band structures by adding further bands at the top and bottom of the property value range. Additional bands also provide smaller proportional changes in tax rates between bands.
Changes include:
- Additional lower bands provide more differentiation among lower-value properties
- New upper bands (J and K) for very high-value properties
This structure provides a smoother progression from the lowest to the highest-value homes. It allows for more precise banding and reduces sudden jumps in council tax liability between bands.
Under this design, households in the lowest-value homes (Band A1) would see a reduction in rates equivalent to an estimated £260 per year based on average 2025-26 council tax charges across Scotland. Homes in Bands A2 to C would see reduced rates equivalent to an estimated £130 to £200. Properties in the highest band (K) would face higher rates equivalent to an estimated £2,750 more per year.[54]
Although the overall results are quite similar to the progressive 12-band model, the extra bands allow for greater precision in how council tax liability is distributed across property values.
| Band | Upper threshold | Relative tax rate | Tax rate (2025-26) | % of properties |
|---|---|---|---|---|
| A1 | £65,000 | 0.500 | £772 | 5.45 |
| A2 | £85,000 | 0.556 | £857 | 8.79 |
| B1 | £110,000 | 0.611 | £943 | 11.84 |
| B2 | £145,000 | 0.694 | £1,072 | 14.97 |
| C | £185,000 | 0.806 | £1,243 | 13.65 |
| D | £240,000 | 1 | £1,543 | 14.39 |
| E | £315,000 | 1.325 | £2,045 | 13.12 |
| F | £410,000 | 1.650 | £2,546 | 9.02 |
| G1 | £550,000 | 2.000 | £3,086 | 5.44 |
| G2 | £745,000 | 2.400 | £3,703 | 2.27 |
| H | £1,005,000 | 2.800 | £4,320 | 0.72 |
| I | £1,355,000 | 3.222 | £4,972 | 0.24 |
| J | £1,830,000 | 3.667 | £5,658 | 0.08 |
| K | ∞ | 4.222 | £6,515 | 0.02 |
A data table showing new band structures and relative tax rates under the 14-Band Progressive System.
Source: Adam et al. (2025), ‘Revaluation and reform of council tax in Scotland: design considerations and potential impacts’, Scottish Government Research Report
3.3.5 Impacts on Accuracy, Progressivity and Revenue
All of the national revaluation models aim to improve the accuracy of the system by ensuring that council tax is based on the current value of properties, rather than estimates of 1991 values.
Key comparisons:
- Illustration 1 - The pure revaluation - this design improves accuracy but keeps the existing structure and its limitations.
- Illustration 2 - The more differentiated 12-band model reduces large jumps in bills and makes modest changes to make the system more progressive – with larger increases as property values rise.
- Illustration 3 - The progressive 12-band adjusts the tax rates further to make the system more progressive.
- Illustration 4 – The 14-band system has the most progressive rates of the four. It also reduces large jumps between bands.
Across all models other than a pure revaluation, lower-income households tend to benefit the most, while those with higher-value homes face increased rates to varying degrees. However, total revenue remains broadly the same nationally. These models do not assume any increase in funding, but rather focus on how the tax burden is distributed in relation to property values.[55]
| Income Quintile | Pure revaluation | 12-band differentiated | 12-band less regressive | 14-band less regressive |
|---|---|---|---|---|
| Quintile 1 (lowest income) | £6 | £2 | -£9 | -£12 |
| 2 | £7 | -£9 | -£43 | -£52 |
| 3 | £6 | £0 | -£19 | -£15 |
| 4 | -£26 | -£28 | -£31 | -£24 |
| Quintile 5 (highest income) | £7 | £35 | £103 | £104 |
A data table showing estimated average changes in annual net council tax bills by income quintile for each illustrative model.
Source: Adam et al. (2025), ‘Revaluation and reform of council tax in Scotland: design considerations and potential impacts’, Scottish Government Research Report
Questions:
6. Which of the potential council tax systems do you most support?
Revaluation with 8 existing bands
Revalued 12-band (differentiated) system
Revalued 12-band (progressive) system
Revalued 14-band system
The current council tax system with no revaluation
Don’t know
7. Which of the potential council tax systems do you least support?
Revaluation with 8 existing bands
Revalued 12-band (differentiated) system
Revalued 12-band (progressive) system
Revalued 14-band system
The current council tax system with no revaluation
Don’t know
3.3.6 Impacts on Rents and Property Value
Council tax influences how much people are willing or able to pay to live in certain properties.[56] If council tax goes down, living there becomes cheaper, so demand may increase, which can lead to higher rents and property prices than if there had been no change in council tax. If council tax goes up, demand may fall, and prices may reduce compared to if there had been no change in council tax. This effect, where future tax costs are reflected in current property prices and rents, is called capitalisation.[57]
If council tax rises, homeowners do not lose twice. They either:
- stay in the home and pay more tax over time, or
- sell the home for a lower price and stop paying the tax.
If the changes in council tax are fully capitalised into property values, the total financial impact is similar either way for homeowners. Whoever is the owner-occupier of the property when the tax changes will feel the effect, and future homebuyers will pay a price that reflects capitalisation of the new tax level.[58]
In the case of rental property, the immediate impact would be felt by tenants who have to pay council tax. Over time, rents may adjust, passing the impact onto landlords.[59]
How large the effects on property values are is particularly uncertain, given it depends not just on how much the council tax bill changes but also how people value future costs and savings and we recognise that people consider a range of complex factors when deciding where they wish to live. The more those future costs or savings on council tax affect the price they are willing to pay for a property, the greater the impact on prices and rents. This is known as a “discount rate”. A lower discount rate would increase the effects and a higher discount rate would decrease them.[60]
To reflect this uncertainty, the IFS estimated impacts on property values under three discount rates, 1%, 3% and 5%, with 3% as the central scenario, which effectively assumes that after adjusting for inflation, £1 in a year’s time is valued at 97p today.
It was estimated that changes in property values would be more pronounced in the illustrative council tax band designs that most increase progressivity, and particularly affect the least and most valuable properties, given they would be expected to face the largest shifts in council tax rates, on average.[61]
For example, (using a 3% discount rate) for properties worth £60,000, a pure revaluation would have little estimated impact on values (most properties of this value are already in Band A), the 12-band systems cause an estimated increase in value of around 6%, and the 14-band system an estimated increase of around 8%. On the other hand, a property worth £500,000 would be estimated to fall in value by around 2% under a pure revaluation and 3–5% under the 12-band and 14-band systems, as average net council tax bills increase.[62]
For more detail on this you are encouraged to read Revaluation and reform of council tax in Scotland: design considerations and potential impacts’.
Contact
Email: LocalTax@gov.scot