The Scottish Government is currently consulting on plans to introduce two new Council Tax bands for higher-value homes, a proposal that has quickly become known as Scotland’s version of a ‘mansion tax’. The consultation runs until 24 August and, if approved by Parliament, the changes would come into force from April 2028.
Under the proposals, two new Council Tax bands would be created:
- Band I for properties valued between £1 million and £2 million
- Band J for properties valued at more than £2 million
Illustrative figures published by the Scottish Government suggest homeowners in Band I could pay around £720 more per year than the current Band H rate, while those in Band J could face an increase of approximately £3,600 annually. Final rates have not yet been decided and will be considered following the consultation process.
As part of the changes, Scottish Assessors would undertake a targeted revaluation of all homes estimated to be worth more than £1 million using April 2026 market values. Importantly, the existing valuation system would remain unchanged for all other properties.
The proposal is expected to affect fewer than 1% of homes across Scotland but its impact is likely to be felt most keenly in Edinburgh, where the prime housing market has grown considerably over the last decade. Recent market data suggests there are more £1 million plus property transactions taking place in Edinburgh than ever before. In fact, 2024 was a record year for £1 million plus home sales across Scotland, with Edinburgh accounting for more than half of all such transactions and continuing to dominate the country’s prime residential market.
What remains unclear is how much influence the proposed tax changes will have on buyer and seller behaviour. At the top end of the market, an additional annual Council Tax charge may be relatively modest when viewed against the overall cost of purchasing and owning a £1 million property. For some buyers, factors such as location, school catchment, lifestyle and availability of stock may continue to outweigh any increase in annual property taxes. However, taxation is rarely considered in isolation. The proposal arrives at a time when buyers are already navigating higher costs, changing mortgage conditions and a broader discussion around wealth and property taxation. For some households, the cumulative effect of these costs may influence future moving decisions or purchasing budgets.
From an Edinburgh perspective, it is simply too early to predict the long-term consequences this proposal will have. Edinburgh continues to attract strong demand from professional families, returning expatriates and international buyers. Whether the introduction of higher Council Tax bands materially changes that demand remains to be seen.
For now, the proposal should be viewed as exactly that; a proposal. Until the consultation concludes and final details are confirmed, there are more questions than answers. What we do know is that Edinburgh’s prime property market is larger, stronger and more active than at other points in recent history and the response from buyers and sellers over the coming years will be closely watched by everyone involved in the housing market.