Scottish Budget 2026 to 2027: Your Scotland, Your Finances - a guide

Scottish Budget 2026 to 2027: guide 

The Scottish Government is accountable to the Scottish Parliament and to the people of Scotland for its use of public money.  

Devolution allows the Scottish Parliament to decide how much money to spend on different policy areas, including:  

• schools  

• hospitals  

• policing  

• certain social security benefits  

• the economy  

• climate change  

• the environment  

Delivery in these areas involves a range of partners including local government, public bodies, and the third sector.  

Each year we publish a balanced budget that sets out the spending plans for the new financial year. The annual Scottish Budget covers each financial year, which runs from 1 April until 31 March.  

The Scottish Budget was presented to Parliament on 13 January 2026. This details Scottish Ministers’ spend proposals for the year ahead and the Scottish Parliament will scrutinise this information through the Scottish Budget Bill.  

We introduced the Bill on 15 January 2026, to be scrutinised by the Scottish Parliament.  

The Scottish Budget for 2026 to 2027 has been set at £67.9 billion. 

The 2026 to 2027 Scottish Budget is set against continued challenges to the public finances.  

A decade and a half of Westminster imposed austerity plus high inflation, has significantly eroded the value of our  funding. Our public services are also facing growing demands, including from factors such as an ageing population.   

The Budget seeks to balance the immediate pressures of the current financial landscape while delivering our four priorities for the people of Scotland:  

• eradicating child poverty  

• growing the economy  

• tackling the climate emergency 

• ensuring high quality and sustainable public services 

Total spending plans at a glance  

The approximate planned expenditure for each group of policy areas (known as portfolios) across the Scottish Government is shown below.  

Each portfolio supports Scottish Ministers in the delivery of our Programme for Government, and national outcomes for Scotland as set out in the National Performance Framework  

Scottish Government portfolio	Total expenditure
Health and Social Care	£22.5 billion
Finance and Local Government	£18.6 billion
Social Justice	£8.1 billion
Education and Skills	£4.9 billion
Justice and Home Affairs	£4.6 billion
Transport	£4.3 billion
Deputy First Minister, Economy and Gaelic	1.4 billion
Housing	£1.2 billion
Rural Affairs, Land Reform and Islands	£1.1 billion
Climate Action and Energy	£446 million
Constitution, External Affairs and Culture	£416 million
Crown Office and Procurator Fiscal Service	£260 million

The Scottish Budget also includes funding for the Scottish Parliament and for Audit Scotland, which totals around £183 million.  

Key policy measures  

As part of our work to eradicate child poverty, we will: 

• provide £61.5 million for the Tackling Child Poverty fund 

• invest £7.2 billion in social security assistance, ensuring around 2 million people continue to benefit from our system  

• increase the Scottish Child Payment in line with inflation to £28.20 per week 

• invest £50 million in the Whole Family Support package to support parents into employment 

As part of our work to improve public services, we will: 

• provide a record investment of almost £22.5 billion in Health and Social Care 

• invest £36 million to establish local walk-in GP services 

• deliver funding of almost £15.7 billion for Local Government 

• invest up to £200 million to support further improved attainment for children and young people impacted by poverty 

As part of our work to grow the economy, we will: 

• invest over £7.6 billion across capital projects in Scotland 

• invest £2.4 billion in Scotland’s colleges, universities and skills system 

• continue the Small Business Bonus Scheme for the next three years 

• invest £47 million to support the local economies of communities and town centres through regeneration 

• raise the basic and intermediate tax thresholds by 7.4%, effectively twice the rate of inflation 

As part of our work to tackle the climate emergency, we will: 

• invest a total of £5 billion of climate positive spend in 2026 to 2027 

• provide £316 million to support the switch to sustainable modes of travel 

• provide over £335 million to help households and business to change to low-carbon heating systems 

• invest over £26 million in Nature Restoration, £37 million in woodland creation and £28 million in peatland restoration 

How the Scottish Budget works 

The Scottish Budget is a living process that takes place all year round. It begins with the publication of the Medium-Term Financial Strategy (MTFS), normally in May each year. The MTFS sets the medium-term context for annual budget decisions by presenting the outlooks for funding and spending over a five-year period and the Government’s overall strategy for ensuring the sustainability of public finances. The seventh MTFS was published on 25 June 2025, alongside a Fiscal Sustainability Delivery Plan (FSDP) which set out clear actions to deliver the strategy outlined in the MTFS. 

The Programme for Government is usually published at the start of each Parliamentary year and sets out our objectives and top priorities. The Budget then sets out how our objectives will be funded. This year’s Programme for Government: Building the Best Future for Scotland, outlines key priorities across various sectors, focusing on eradicating child poverty, growing the economy, tackling the climate emergency, and delivering high quality and sustainable public services. 

Spending decisions are informed by forecasts from the Scottish Fiscal Commission (SFC). The SFC provide forecasts of the Scottish economy, tax receipts, social security expenditure, and an assessment of our projections of borrowing twice yearly – once at the MTFS and once at Budget. 

To help understand how the Budget might affect different people in Scotland, we also produce the Strategic Integrated Impact Assessment. An additional publication on ‘Distributional Analysis’ shows that our tax and social security system is “progressive” - the higher a household’s income, the greater the share of their income they pay in tax, and the less they receive in social security.  

We set out our spending plans in the Scottish Budget and the introduction of a Budget Bill each year. Once the Budget Bill is introduced to Parliament, it goes through three stages before coming into effect:  

• stage 1: debate on the general principles of the Bill  

• stage 2: changes to the Bill are suggested by Scottish Government Ministers  

• stage 3: MSPs decide on any further changes proposed 

• MSPs vote on whether to pass the Bill. 

The Budget is then amended during the year via the Autumn and Spring Budget Revisions. This supports financial scrutiny and allows the Scottish Parliament to authorise any changes to the Budget Act.  

More information on the Scottish Budget process is available.  

How the Scottish Budget is funded  

The Scottish Budget is funded through a combination of the Scottish block grant (annual funding from the UK Government), taxes raised in Scotland, and limited borrowing powers.  

The Scottish block grant is annual funding from the UK Government, which is effectively a share of funds raised through UK-wide taxes. This is calculated using the Barnett formula, which allocates us a share of total comparable UK spending on devolved areas based on Scotland’s share of the UK population. This usually sits just below 10%. This funding is received for Scottish Ministers to determine how best to utilise as a whole.  

This funding is then added to the devolved tax income raised in Scotland to fund spending on devolved public services in Scotland.  

The Fiscal Framework is an agreement between the Scottish and United Kingdom Governments, which details how Scotland must manage its funding. This includes limits on borrowing powers and on the use of a reserve to transfer funding between financial years. The agreement also details the arrangements for the adjustments made to the Scottish block grant, to account for the devolution of certain tax and social security powers – these are called ‘block grant adjustments.’  

An updated Fiscal Framework was agreed in August 2023 by the Scottish and UK Government.  

2026 to 2027 Scottish Tax

You may find it helpful to consult this glossary of tax terms.  

The Scottish Parliament has the power to set the rates and bands of Income Tax paid by Scottish taxpayers on non-savings and non-dividend income. This is income earned through employment, self-employment, pensions, or property. Scottish Income Tax is collected by HMRC and the money raised through the tax is then transferred to the Scottish Government.  

There are three other taxes in operation that are fully devolved and are set by the Scottish Parliament:  

• Non-Domestic Rates (NDR), often referred to as ‘business rates,’ are a tax paid on non-residential property. Current NDR rates  

• Land and Buildings Transaction Tax (LBTT) is a tax payable on land and property transactions in Scotland over a certain value. Current LBTT rates  

• Scottish Landfill Tax (SLfT) is a tax on the disposal of waste to landfill. The tax provides a financial incentive to reduce the amount of waste going to landfill. Current SLfT rates  

The Scottish Aggregates Tax (SAT) is a tax that will apply to the commercial exploitation of primary aggregates (such as crushed rock, sand, and gravel) in Scotland. It is due to be introduced on 1 April 2026 and will replace the UK Aggregates Levy (AGL) in Scotland. Current AGL rates. 

Our animated video, ‘Raised in Scotland. Spent in Scotland.’ summarises how tax revenues contribute to the Scottish Budget.  

Approach to taxation  

Scotland's Tax Strategy: Building on our Tax Principles, published in December 2024, sets out our approach to taxation, building on our Framework for Tax published in 2021. The priorities set out in the Tax Strategy will enable us to deliver tax policy which considers the whole tax system, informed by a programme of evidence and evaluation. Our approach to taxation is also founded upon engagement with stakeholders. This allows us to understand and consider a wide range of views, including from the general public, when designing tax policy.  

Our progressive tax policies are designed to support those on lower and middle incomes, and our Tax Strategy sets out how we aim to provide a more stable tax system which allows taxpayers to better manage their finances and helps businesses to plan and make investment decisions with confidence.  

The priorities included in the Strategy will ensure Scotland’s tax system continues to raise the revenues needed to support Scotland’s economy, invest in vital public services including the NHS, and eradicate child poverty.  

Proposed Scottish Income Tax policy for 2026 to 2027 

Proposed Bands	Band name	Rate (%)
£12,571*- £16,537	Starter Rate	19
£16,538 - £29,526	Scottish Basic Rate	20
£29,527 - £43,662	Intermediate Rate	21
£43,663 - £75,000	Higher Rate	42
£75,001 - £125,140**	Advanced Rate	45
Above £125,140**	Top Rate	48

* assumes individuals are in receipt of the Standard UK Personal Allowance.  
** those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.  

2025 Medium-Term Financial Strategy 

The Scottish Government’s seventh Medium-Term Financial Strategy (the Financial Strategy) and a Fiscal Sustainability Delivery Plan (the Delivery Plan) were published on 25 June 2025. 

The 2025 Financial Strategy set out the Scottish Government’s strategy to deliver sustainable public finances, based on the three pillars of public spending, economic growth and taxation. 

The 2025 Financial Strategy also set out that: 

• the economic outlook for Scotland is improving but remains uncertain due to rising energy prices, inflation and political uncertainty around the world; 

• the funding outlook is challenging, with our total funding from the UK Block Grant expected to grow by less than 0.8% a year over the next five years, when adjusted for inflation; 

• the spending outlook shows our spending is expected to grow beyond our funding, due to increasing demand for public services and the costs of tackling child poverty, reaching net zero, and improving our infrastructure. 

These outlooks are informed by the latest Scottish Fiscal Commission forecasts. The outlooks can and do change, but are intended as a guide to support financial planning. 

The Delivery Plan brings together the key actions the Scottish Government is taking to deliver the fiscal strategy over the next five years, from now until financial year 2029 to 2030. This includes actions to: 

• ensure funding is fully focussed on delivering the government’s priorities

• increase efficiencies and productivity to make the most of every pound of public money

• reform the way we deliver services to do more with what we have

• invest in prevention, to improve outcomes for people in the longer term, reducing demand on services like the NHS

• grow our economy and ensure the tax system raises the revenue needed to achieve our priorities

Together, the Financial Strategy and Delivery Plan set out how we are ensuring public money is fully focused on delivering Government priorities, as set out in the Programme for Government 2025 to 2026. These two documents also provide the basis for the 2026 to 2027 Scottish Budget and the forthcoming Scottish Spending Review.