Council tax - revaluation and reform: key findings summary

Effects on households’ bills and broader reform of council tax

We analyse the effect of the potential reform options on households’ bills assuming that council tax revenue (and therefore the average bill) would be approximately unchanged across Scotland as a whole.

With half of properties remaining in the same band, and some households’ bills being covered by the means-tested council tax reduction scheme (CTRS), a pure revaluation would mean that an estimated 57% of households would see little change in their net tax bill, as shown in the top row of Figure 3. We estimate that around 21% would see a fall of £50 a year or more and 21% would see an increase of £50 a year or more.

Note: Assumes full take-up of CTRS.

Source: Reproduced from Adam et al., 2025.^[ix]

Low-income households would be less likely to see any change in their net bill than higher-income households, because many low-income households are eligible for the CTRS, which rises or falls to offset any change in gross council tax liability.^[x] However, the green line in Figure 4 shows that revaluation on its own would have little estimated impact on the average net bills paid by households in different parts of the income distribution. This is because, while our analysis confirms that higher-income households live in more valuable properties than lower-income households, it also shows that they do not live in properties that have gone up by more in value (in percentage terms) than lower-income households. Therefore, it is estimated that they are no more likely to move up bands than lower-income households.

Note: Assumes full take-up of CTRS. Households are allocated to quintiles based on income measured after taxes and benefits but before housing costs are deducted, and are adjusted for household size and composition using the modified OECD equivalence scale. Pure Reval = Pure Revaluation; 12-band Diff. = 12-band Differentiated; 12-band LR = 12-band less regressive; 14-band = 14-band less regressive; Continuous = Continuous Proportional.

Source: Reproduced from Adam et al., 2025.^[xi]

The other reforms we model go beyond pure revaluation to change the extent to which tax rates vary with property value. The second row of Figure 3 shows that we estimate that the 12-band differentiated system would mean more households seeing their bill fall by £50 a year or more (29%) or rise by £50 a year or more (29%). However, the orange line in Figure 4 shows that estimated average bills would again change little across the income distribution, although they would increase a little for households in the highest quintile of the income distribution. This reform option would primarily differentiate bills more finely by property value, rather than shifting council tax bills from lower- to higher-value properties.

The third and fourth rows in Figure 3 show our estimates that the 12-band and 14-band less regressive systems would mean more households seeing their bill fall by £50 a year or more (36–40%) than rise by £50 a year or more (20–22%) – though the fact that the reforms are designed to leave overall revenue unchanged means that the average increase in bill among those seeing an increase would be larger than the average reduction among those seeing a reduction.

The analysis shows that reductions in tax rates for low-value properties and increases for high-value properties under these systems mean that they would reduce average bills for low- and middle-income households and increase them for high-income households. This can be seen in the purple and blue lines in Figure 4. The largest estimated average reduction (around £50 a year) would be for households in the second-lowest quintile of the income distribution rather than the bottom quintile. This is because many of the latter group are insulated from council tax by the means-tested CTRS. We estimate that the average net bill for households in the highest-income quintile would increase by £100 a year to pay for the reductions for lower-income households.

We estimate that these less regressive systems would also reduce average net council tax bills for younger adults (under 45), single adults (including single and widowed pensioners), disability benefit recipients and renters. Conversely, we estimate that average bills would increase for older working-age adults (aged 45-64), couples (including pensioner couples) and owner-occupiers.

The blue and purple lines in Figure 4 are almost indistinguishable from each other. This shows that the 12-band and 14-band less regressive systems would have similar overall distributional effects. But while the broad patterns are similar, Table 1 at the end of this note shows that the 14-band system would involve lower bills for the very lowest-value properties and higher bills for the very highest-value properties.

The 12-band and 14-band less regressive systems would still be some way from a continuous proportional system which would fully address the regressivity of council tax. As shown by the grey line in Figure 4, we estimate that a proportional system would reduce average bills by around £135 a year for the second-lowest income quintile of households and increase average bills by around £265 for the highest income quintile.