Scottish Budget 2027-28: Scottish property income rates, council tax growth and a freeze switch, Bands I and J, and missing Scottish payments #2891

Context

The Scottish Budget 2027-28 is on 3 December 2026 (checklist: PolicyEngine/uk-scottish-budget-2027-28#9). 2.174.1 carries every item in PolicyEngine/uk-scottish-budget-2027-28#1:

• the Pension Tax Allowance;
• the Household Energy Payment;
• the rest-of-UK property rates of 24%, 44% and 49%;
• the Carer Supplement uprating.

Its 2027-28 Scottish starter and basic thresholds also match 2.175.x.

Already open

• Fix Scottish tax bands and test Marriage Allowance rates directly #2828 (PR), tax_band compares a Scottish taxpayer's total income with the Scottish thresholds; the Scottish rates apply to non-savings, non-dividend income only #2350, Correct Scottish income tax limits and rates from 2018-19 #2783 and tax_band puts rest-of-UK income at a limit in the band above #2782: Scottish tax bands and limits.
• Roadmap: complete, interaction-aware UK tax–benefit coverage (2000-onward) #1775: the roadmap lists Adult Disability Payment, Child Disability Payment and Best Start. It also lists council tax by band and authority.
• Pay the Scottish Carer Supplement for each Carer Support award week #2857, Pay the Scottish Carer Supplement for each award week of Carer Support #2791, Count Carer Support Payment after the overlapping-benefit reduction in Scottish working-age Council Tax Reduction #2821 and Scottish Council Tax Reduction counts Carer Support Payment that an overlapping benefit cancels #2820: the Carer Supplement per award week, and Carer Support Payment in Scottish Council Tax Reduction.
• Benefit cap: model caps about 1.3x DWP's count in 2026-27 (204k vs 160k in May 2026) #1818: the model caps about 1.3 times DWP's benefit cap count, which any mitigation would inherit.
• Update the OBR forecasts to the October 2026 Economic and fiscal outlook #2711: the update to the October 2026 OBR forecasts.
• PIP review: Adult Disability Payment in Scotland, a single-activity test, and PIP as the gateway to UC health support #2889 covers Adult Disability Payment, for the PIP review.

1. Scottish property income rates, from 2027-28

The law. Finance Act 2026 s. 8 and Sch. 2 let the Scottish Parliament set property income rates. SI 2026/1023 appoints 16 September 2026 for this, with 2027-28 as the first tax year. Scottish property rates must use the same limits as other income.

Current behaviour. In property_income_tax (variables/gov/hmrc/income_tax/liability/property_income_tax.py), formula_2027 keeps Scottish taxpayers on the main Scottish rates. That is right until the Scottish Parliament sets property rates, but a reform cannot yet set them apart.

Proposal. A per-band add-on, gov.hmrc.income_tax.rates.scotland.property_rate_addition, with one value per Scottish band, all 0 in current law.

• The Scottish branch adds each band's add-on times the property income in that band.
• It takes the band slices on the main Scottish thresholds, after other non-savings income, as the rest-of-UK branch does on the UK thresholds.
• With an add-on, a reform to the main Scottish rates or thresholds still reaches property income (the link Fix pre-2027 property income tax main-rate reforms #2625 restored for the rest of the UK). "Main rates plus 2p" is then a uniform 0.02.

Tests. A Scottish landlord in each band, and one whose property income spans two bands.

2. The Household Energy Payment in Scotland

household_energy_payment reads three parameters:

• countries, set to England;
• bands, set to A–D;
• amount: £100 in 2026-27 and £0 from April 2027.

Two asks:

• confirm that a reform can set a list parameter such as countries, or add amounts by country;
• an optional route for Council Tax Reduction recipients in any band. Scotland's 2022 £150 had one, and 2.174.7 added it for that payment.

3. Council tax: Scottish growth, and a freeze switch

Current behaviour. uprate_council_tax (data/economic_assumptions.py) grows bills by (1 + g) / (1 + household weight growth). yoy_growth.obr.council_tax.scotland holds 3.86% a year from 2025.

Outturn. The Scottish Government's average Band D rose from £1,418.11 in 2024-25 to £1,543.30 in 2025-26 (+8.8%), then to £1,653.44 in 2026-27 (+7.1%). #1246 set growth to outturn for 2023 to 2025.

Proposal:

• Scotland's 2025 and 2026 growth. Set it to outturn: Band D growth times the growth in Band D equivalents (CTAS and CTAXBASE, both in Chronicle). Check the OBR line's basis first (Update the OBR forecasts to the October 2026 Economic and fiscal outlook #2711).
• A freeze switch. It would hold Scottish bills flat in cash for a chosen year (g equal to weight growth), or cap the rise, so that a freeze or cap is one parameter.

4. Council tax Bands I and J, from April 2028

The proposal. The Scottish Government consulted, closing 24 August 2026, on two bands from 1 April 2028:

• Band I for homes valued at £1 million to £2 million, and Band J for homes over £2 million, on values at 1 April 2026;
• illustrative charges of about £720 and £3,600 a year above Band H.

The Council Tax (Scotland) Bill would legislate them.

Current behaviour. CouncilTaxBand runs A–I, where I is Wales's band, and band_ratios/scotland.yaml covers A–H.

Proposal. Follow the High Value Council Tax Surcharge (variables/gov/hmrc/high_value_council_tax_surcharge.py): a Scottish charge on owner-occupied homes valued above the thresholds at April 2026 prices (#2392's valuation approach).

• The charge is Band D × (the Band I or J multiplier − the home's current band ratio).
• The thresholds and multipliers are parameters, in force from 1 April 2028.

The alternative is to add J to the enum, with Scottish I and J ratios and a rule that bands a home from its value. Results will also need data: Microcosm revalues homes from sale prices only in England and Wales so far.

5. Scottish payments not modelled

gov/social_security_scotland holds Carer Support Payment, Scottish Child Payment, Pension Age Winter Heating Payment and the Two Child Limit Payment. Missing (PolicyEngine/uk-scottish-budget-2027-28#6):

• Adult Disability Payment and Child Disability Payment (see PIP review: Adult Disability Payment in Scotland, a single-activity test, and PIP as the gateway to UC health support #2889 and Roadmap: complete, interaction-aware UK tax–benefit coverage (2000-onward) #1775);
• Best Start Grant (pregnancy and baby, early learning, school age) and Best Start Foods;
• Child Winter Heating Payment;
• Winter Heating Payment, the low-income payment that replaced Cold Weather Payment in Scotland;
• Discretionary Housing Payment mitigation of the benefit cap, as a contributed option on Scottish households' benefit cap reduction (see Benefit cap: model caps about 1.3x DWP's count in 2026-27 (204k vs 160k in May 2026) #1818);
• a young parent top-up to UC, as a contributed option, if the Budget announces one.

Scottish Budget Table 5.08, already in Chronicle, gives spending on each payment for checks.

Relationship to data work

None of Microcosm's data work for this event is decided. If any goes ahead:

• Bands I and J. Results need both item 4 and a Microcosm step that revalues Scottish homes from sale prices, as it already does for England and Wales. The charge needs homes valued above the thresholds, and the data doesn't hold them yet.
• Scottish disability payments. Anchoring them in the data can bind Table 5.08 spending on the PIP columns without item 5. Writing Adult Disability Payment apart would need PIP review: Adult Disability Payment in Scotland, a single-activity test, and PIP as the gateway to UC health support #2889's variables first.
• Property income and council tax. An anchor for Scottish property income (from PRIS), and a Scottish council tax liability target, need nothing from this issue. They would sit under the costings in items 1 and 3.
• The Scottish income tax diagnostic needs nothing here.

The facts this work would use are requested in PolicyEngine/chronicle#420.

Not in this issue

• The Scottish income tax base check (Scottish income tax base moves 8% between Microcosm builds a6299504 and 0639b9c7: check against HMRC outturn uk-scottish-budget-2027-28#7) and Scottish geography below region (No Scottish geography below region in the national Microcosm file; local file only staged uk-scottish-budget-2027-28#8): data and packaging.
• Anchoring Scottish property income, council tax and Adult Disability Payment in the data: Microcosm.