EDINBURGH, July 7 — The Scottish Government has formally launched a consultation on adding two new higher bands to the council tax system, a move that would specifically target properties valued at over £1 million. The proposal, reported by the Scottish Daily Mail on July 6, represents the most significant structural change to the tax since its introduction in 1993. The council tax system in Scotland, which replaced the community charge, or poll tax, currently operates with eight bands.
These bands, labelled A through H, have remained largely unchanged for more than three decades. The proposed expansion would create bands I and J, aimed squarely at the most expensive homes in the country.
From poll tax to mansion tax
The history of local taxation in Scotland is a turbulent one. The poll tax was introduced in 1989 in Scotland a year ahead of England and Wales, sparked widespread protests and non-payment campaigns, and was eventually abandoned. Council tax was brought in as its replacement in 1993.
That system, with its eight bands, has been the framework ever since. The current proposal from the SNP Government marks a clear departure from that framework.
The addition of bands I and J would primarily affect a relatively small number of high-value properties. The consultation, launched in 2026, is now open for public and stakeholder input. The Scottish Government has not yet set specific tax rates for the new bands, but the consultation is expected to explore various options for how much more the owners of these properties would pay.
The SNP has a track record of pursuing progressive taxation policies. The party has previously made changes to income tax rates in Scotland, creating a system that is distinct from the rest of the United Kingdom.
The mansion tax proposal appears to be a continuation of that approach, focusing on wealth held in property rather than just income.
What the consultation means
The consultation process is a standard step in Scottish Government policy-making. It invites responses from local authorities, housing organisations, property professionals, and members of the public. The responses will be analysed before any legislation is brought forward.
The government has put a concrete proposal on the table, rather than merely discussing the idea in principle. For homeowners with properties valued at over £1 million, the potential financial implications could be substantial.
The exact impact will depend on the rates set for the new bands, which have not yet been determined. The consultation document is expected to outline several possible rate structures. The timing of the consultation, launched in 2026, places it within the current parliamentary session.
Any legislation resulting from the consultation would require approval from the Scottish Parliament. The process from consultation to implementation typically takes months, if not longer.
Critics of the proposal have raised concerns about the potential impact on the housing market. Some argue that a mansion tax could discourage high-net-worth individuals from living in Scotland or investing in Scottish property. Supporters counter that the tax is a fair way to raise revenue from those with the greatest ability to pay.
Looking ahead
The consultation period will run for a set number of weeks, after which the Scottish Government will publish an analysis of the responses. Only then will the public see the specific rate proposals for bands I and J. The government has not indicated a timeline for introducing legislation.
For now, homeowners with properties in the upper valuation ranges should monitor the consultation process closely. The outcome could have significant implications for their tax bills.
As with any major policy change, homeowners should consult their financial advisers for personalised guidance on how the proposed changes might affect them. The consultation provides an opportunity for all stakeholders to have their say before any final decisions are made.
