Scottish Budget 2026 to 2027: distributional analysis
Analysis of the estimated impact on household incomes resulting from tax, social security and public spending decisions made in the 2026-27 Scottish Budget and the 2026 Spending Review.
Footnotes
1 To summarise impacts across the income distribution, households are ranked from the lowest net equivalised household income to the highest, then divided into equal groups. Where there are ten groups, these are called deciles and where there are five groups, these are called quintiles.
2 All estimates are modelled using the UKMOD microsimulation model, based on policy decisions in the 2026-27 Scottish and UK budgets. Council Tax is assumed to rise in line with the September 2025 CPI, though local authorities will set their own rates after the Scottish Budget.
3 These calculations are based on differences in net disposable household incomes, which are largely explained by differences in social security and personal income tax, as presented in Figures 2 and 3.
4 More than half (around 55%) of Scottish taxpayers are expected to continue to pay slightly less Income Tax than if they lived elsewhere in the UK.
5 Scrapping the two child limit to help end child poverty - gov.scot
6 Over time, the number of households affected by the two-child limit is expected to rise as more children are born after April 2017, leading to a greater long-term impact.
7 Benefit cap: number of households capped to May 2025 - GOV.UK
8 In all instances, uprating with inflation refers to increasing by September 2025 Consumer Price Index inflation rate for the preceding 12 months (3.8%).
9 Detailed spending plans were not finalised until 13 January. This analysis uses spending plans as of 5 January for portfolio allocations, with minor differences from final spending published in the Scottish Budget and Spending Review.
10 Other major spending areas relating to the direct provision of public services to households in Scotland that are not captured in the public spending module of the model include Social Care, Justice and Home Affairs and Local Government spending not captured in areas already covered.
11 See the methodological annex for more detail
12 Values for schools and ELC are too small to show on the charts.
13 Budget 2019 to 2020: feasibility of distributional analysis - study - gov.scot
14 The distribution of public sector spending
15 OECD’s The Impact of Publicly Provided Services on the Distribution of Resources