The Scottish Budget 2025–26: Winners, losers and what it means for you
The Scottish Budget for 2025–26, set against a backdrop of ongoing economic pressure, inflation, rising service demand and evolving fiscal arrangements, has been presented to the Scottish Parliament. At £63.4 billion, it reflects deliberate choices by the Scottish Government to balance fiscal responsibility with investment in public services and support for households and businesses.
This budget will shape public services, taxes and financial wellbeing in Scotland over the coming year. But what does it really mean for individuals, families, and businesses? Below, we unpack the key winners and losers, and offer practical insights to help you make sense of the changes with your financial adviser.
Winners in the 2025–26 Scottish Budget
- Lower and middle-income households
One of the central tax measures in the Budget is the adjustment to Income Tax thresholds. The starter basic and intermediate rate thresholds are being increased by 3.5 percent, which means those earning at lower and middle income levels will keep more of what they earn before moving into higher tax bands.
What this means:
- Many taxpayers will pay less tax than they would elsewhere in the UK if they remain in the lower and middle tax bands.
- The Budget’s distributional analysis shows that around 62% of households are better off or unaffected by devolved tax and social security policies, with the Scottish system being more progressive for lower-income households.
This is a clear win for many working families and individuals who will see reduced tax pressure compared with previous years or elsewhere in the UK.
- Public Service users: Health, education and social support
The Budget allocates a significant share of funding to essential services:
- Health and social care receives £21.7 billion, including targeted investment to reduce delayed discharges and improve service delivery.
- Social security accounts for £6.9 billion to support around two million people.
- Investment in colleges, universities, infrastructure, climate action and skills is also expanded.
This means Scots relying on these services, from NHS patients to students and families in need, are protected and, in some cases, better supported.
- Early learners and families with children
The Scottish Government expanded eligibility for free school meals to some lower secondary pupils (S1–S3) in eight local authority areas.
Alongside the Scottish Child Payment, this reinforces Scotland’s commitment to tackling child poverty and easing costs for families. These measures are particularly meaningful where the cost of living remains high.
- Green energy and sustainable jobs
The Budget includes £25 million to support green energy jobs and build a new green energy supply chain, demonstrating strategic investment in the future economy and employment.
This is good news for professionals and communities seeking opportunities in renewable energy and sustainability sectors.
Groups who could potentially be adversely affected
- Higher earners and those in top tax bands
While the lower and middle thresholds are increasing, higher, advanced and top tax thresholds are frozen.
Scottish Parliament
This means:
- Those on higher incomes will face fiscal drag; paying more tax in real terms as earnings rise with inflation.
- The top 20 % of households are more likely to face a net tax increase, with the top 10 % paying an average increase compared with if they lived elsewhere in the UK.
For high-earners, this is clearly an area to discuss strategic tax planning with your adviser.
- Homebuyers of additional or investment properties
The Land and Buildings Transaction Tax (LBTT) Additional Dwelling Supplement, a surcharge on additional residential properties, is remaining at 8 %.
This especially affects:
- Second-home buyers
- Landlords and property investors
It’s a cost that can materially change the calculations around property investment and should be considered when planning portfolio purchases or disposals.
- Households facing rising local taxes (Council Tax)
Local councils across Scotland are signalling significant council tax increases, with some areas contemplating rises of up to 15 %.
While the Scottish Government provides funding to local authorities, many are still struggling with budget pressures, meaning council tax will likely rise in many areas. This adds to household financial pressures and highlights the importance of reviewing household budgets.
Important context
While the Scottish Budget includes targeted support and tax reliefs, it operates within tight fiscal constraints. Even with increased funding from the UK Government’s Autumn Budget, real-terms growth is modest once inflation and spending commitments are factored in.
This means hard choices still lie ahead, and the financial landscape across Scotland will continue to evolve.
The 2025–26 Scottish Budget seeks to balance investment in public services and fairness in taxation with the realities of squeezed public finances. For many households and families, the changes offer support and relief, particularly at lower- and middle-income levels. For higher earners, investors, and homeowners of additional properties, the impact can be more challenging.
What’s next?
Understanding how the Scottish Budget affects you personally can feel complex, especially where tax, property, pensions, benefits or business finances are concerned. Because the effects are so varied, a tailored conversation with a financial adviser is essential. Only personalised advice can truly account for your income, assets, goals and local circumstances.
If you’re unsure what this Budget means for your finances, now is an ideal time to reach out and book that review with your adviser.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
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