The Scottish Government has opened consultation on two new council tax bands for homes valued above £1 million, setting up a debate over property wealth, local government funding and the long-delayed reform of Scotland’s council tax system.
The proposal would create Band I for homes valued at more than £1 million and up to £2 million, and Band J for homes valued above £2 million. The new bands would take effect from 1 April 2028, subject to legislation in the Scottish Parliament.
The consultation, published on 6 July 2026, runs until 24 August 2026. It asks for views on illustrative rates rather than final charges. On current estimates, Band I homes would pay around £720 more each year than the present average Band H charge, while Band J homes would pay around £3,600 more. Based on 2026-27 average Scottish council tax charges, that would produce an estimated annual bill of about £4,770 for Band I and £7,650 for Band J.
The policy is being described as a “mansion tax”, although legally it would operate inside the existing council tax system. Council tax in Scotland is paid by occupiers, not owners. The Scottish proposal differs from the UK Government’s planned high-value council tax surcharge in England, which applies from £2 million and is designed as a charge on owners.
The Scottish Government says the new bands are intended to make the highest-value homes contribute more to local services. It estimates that fewer than 1% of Scottish homes would be affected, around 15,000 properties in total. Its consultation estimates there may be between 12,680 and 16,740 homes in Band I and between 760 and 1,070 homes in Band J.
The revenue expected from the change is modest. Current estimates suggest the measure would raise between £12m and £16m a year across Scotland. The money would be retained by local government, although the distribution of revenue between councils is still to be agreed with COSLA.
The case for change is straightforward. Scotland’s council tax system still uses property values from 1 April 1991 for Bands A to H. The highest current band, Band H, covers all properties that were worth more than £212,000 in 1991. A home now worth £700,000 and one now worth several million pounds may therefore sit in the same council tax band.
Scottish Assessors state that current council tax bands are based on the assessor’s opinion of open-market value at 1 April 1991. They do not place an exact current value on every home. The existing structure has eight bands, from A to H. Band H begins at a 1991 value of more than £212,000.
The Institute for Fiscal Studies has repeatedly described council tax as regressive by property value. In Scotland, a Band H property pays 3.675 times the tax of a Band A property, even though Band H properties were worth at least 7.85 times Band A properties in 1991, and may be worth far more today. The IFS has also warned that a targeted mansion tax may be a useful step only if it leads to wider reform. If it becomes the final answer, it leaves most of the old system untouched.
That is the central weakness of the Scottish proposal. It updates the valuation basis for homes above £1 million, but keeps the 1991 valuation basis for everyone else. A household in an ordinary home will not be revalued. A household in a high-value home will be assessed against 1 April 2026 values. Scotland would therefore have a hybrid system: current values at the top, 1991 values beneath.
Supporters will argue that this is a practical way to address the most visible unfairness without causing disruption for millions of households. Critics will argue that it creates an uneven system and avoids the harder political work of full council tax reform.
The Joseph Rowntree Foundation has welcomed the move as a positive step, but has said it cannot be the limit of Scotland’s ambition. JRF argues that the council tax system remains outdated and regressive, and that successive Scottish administrations have preserved the status quo despite earlier promises of reform.
ICAS has also raised a process concern. It noted that the mansion tax was announced while a wider consultation on the future of council tax was still open. In its view, announcing a targeted change before hearing feedback on broader reform risked weakening the transparency of the engagement process.
Property-market concerns also need to be treated seriously. Scottish Conservative finance spokesman Craig Hoy has argued that the tax could deter buyers, damage the housing market and affect asset-rich but income-poor people, including older residents living in long-held family homes on modest pensions. The Scottish Government recognises that issue in the consultation, which refers to possible phased increases, deferral arrangements and changes to the Council Tax Reduction scheme. Those protections have not yet been decided.
The strongest objection is that the proposal may raise little money while adding another layer to an already complicated system. Revenue of £12m to £16m a year is small in the context of Scottish local government finance. The consultation states that council tax is expected to raise around £3.5bn net revenue for local government in 2026-27. The new bands would therefore make only a limited contribution to council budgets.
The geographic impact will also be uneven. Registers of Scotland reported that there were 392 residential sales over £1 million in Scotland in 2025-26, with more than half in the City of Edinburgh. East Renfrewshire had the highest median house sale price among local authorities at £305,200, while Inverclyde had the lowest at £123,000. The areas most affected by the new bands are likely to include Edinburgh, East Lothian, Glasgow, East Renfrewshire, parts of Fife, Highland, Argyll and Bute, and other places with concentrations of high-value homes.
The Scottish Greens support stronger property taxation and have long argued for replacing council tax with a more progressive property tax. Green MSP Lorna Slater has said the mansion tax would raise funds for schools, libraries and other local services while responding to Scotland’s housing emergency.
The policy therefore sits between two criticisms. To some opponents, it goes too far by targeting a small number of households and risking unintended effects in the property market. To some reformers, it does not go far enough because it leaves the basic council tax system in place.
Both views can contain truth. A £1 million home represents significant property wealth. Scotland’s top-end property tax burden has been low when measured against current values. At the same time, property value is not the same as income, and a fair system needs credible protections for households that cannot meet sharply higher annual bills without selling or deferring payment.
The proposal is best understood as a political and technical test. If ministers use it as the first stage of wider council tax reform, it may help correct an obvious imbalance at the top of the system. If it becomes a substitute for wider reform, Scotland will still be left with a council tax structure based largely on property values from 1991.
The consultation now gives ministers, councils, assessors, homeowners and tax experts until 24 August to test the detail: how valuations will be carried out, how appeals will work, how low-income occupiers in high-value homes will be protected, how much the system will cost to administer, and whether the new bands will lead to wider reform or close the door on it.
For Scotland, the mansion tax is not the whole argument. It is a small measure inside a much larger unresolved question: whether local taxation should continue to depend on a property map drawn more than three decades ago.
Sources
Scottish Government consultation, Council Tax High-Value Property Bands (Mansion Tax):
https://www.gov.scot/publications/consultation-council-tax-high-value-property-bands-mansion-tax/
Scottish Government consultation, Background and Context:
https://www.gov.scot/publications/consultation-council-tax-high-value-property-bands-mansion-tax/pages/2/
Scottish Government consultation, High-Value Property Bands:
https://www.gov.scot/publications/consultation-council-tax-high-value-property-bands-mansion-tax/pages/3/
Scottish Government consultation, Illustrative Rates and Revenue:
https://www.gov.scot/publications/consultation-council-tax-high-value-property-bands-mansion-tax/pages/4/
Scottish Government consultation, Affordability and Protections:
https://www.gov.scot/publications/consultation-council-tax-high-value-property-bands-mansion-tax/pages/5/
Scottish Government consultation, Questions for Consultation:
https://www.gov.scot/publications/consultation-council-tax-high-value-property-bands-mansion-tax/pages/8/
Scottish Government news release, Mansion tax rates consultation:
https://www.gov.scot/news/mansion-tax-rates-consultation/
Scottish Budget 2026 to 2027, Chapter 2 Tax Policy:
https://www.gov.scot/publications/scottish-budget-2026-2027/pages/4/
Scottish Assessors Association, Council Tax Bands:
https://www.saa.gov.uk/council-tax/council-tax-bands/
Institute for Fiscal Studies, Revaluation and reform of council tax in Scotland:
https://ifs.org.uk/publications/revaluation-and-reform-council-tax-scotland-design-considerations-and-potential
Institute for Fiscal Studies, Scotland’s devolved tax and benefit system is more progressive — but unnecessarily complex and distortionary:
https://ifs.org.uk/news/scotlands-devolved-tax-and-benefit-system-more-progressive-unnecessarily-complex-and
Joseph Rowntree Foundation, Council Tax reform in Scotland:
https://www.jrf.org.uk/neighbourhoods-and-communities/council-tax-reform-in-scotland
ICAS, Scottish Budget: Key decisions and tax strategy:
https://www.icas.com/news-insights-events/news/tax/scottish-budget-key-decisions-and-tax-strategy
Registers of Scotland, Property Market Report 2025-26:
https://www.ros.gov.uk/data-and-statistics/property-market-statistics/property-market-report
UK Government consultation, High Value Council Tax Surcharge:
https://www.gov.uk/government/consultations/high-value-council-tax-surcharge/high-value-council-tax-surcharge
Daily Business, Mansion tax to fund services “could damage market”:
https://dailybusinessgroup.co.uk/2026/07/mansion-tax-to-fund-services-could-damage-market/
Scottish Greens, Raise Funds For Public Services Fairly:
https://greens.scot/scotland-can/raise-funds-for-public-services-fairly
