Publication: Council Tax rises in Scotland

The 2025/26 settlement for local government saw an overall increase in the funding provided to councils, but rising costs and demand continue to put pressure on council finances.

Councils faced difficult decisions when setting budgets this year, including deciding whether to increase council tax rates.

Perhaps not surprisingly, all 32 of Scotland’s councils agreed to raise council tax, with increases ranging from 6 per cent to 15 per cent (with an average increase of 9.5 per cent).

While the Scottish Government is responsible for making decisions about the overall council tax system and has provided funding in support of annual freezes in recent years, council tax levels are set locally.

As well as the normal annual pressures on council budgets, from wage rises to increasing utility costs, the rise in employers’ National Insurance (NI) Contributions was an additional factor councils had to consider when setting recent budgets. According to COSLA, this NI cost will see councils having to find an additional £96 million, even after the Scottish Government has passed additional funding to councils for this purpose.

Residents across Scotland have expectations of local services when they’re asked to contribute more through their council tax payments. But we know from the Local Government Benchmarking Framework (LGBF), which looks at councils’ own and comparative performance across a range of service areas, that we’re starting to see performance deteriorating. While it’s not clear exactly why, we are also seeing continued falling public satisfaction and that’s before members of the public feel the effects of these pending council tax increases.

Council tax only accounts for around 15 per cent of the total funding that councils receive. Councils managed budgets of around £15 billion in 2023/24, with the recent increases expected to raise just over £200 million. This is a significant amount of money, but within the context of the total spent by councils each year on essential local services such as education, collecting bins, maintaining roads and providing care services, council tax income is a relatively small amount.

The scale of the ongoing financial challenges facing all councils requires honest conversations with communities about the decisions required to deliver balanced budgets, including the trade-offs that exist between tax and spending decisions, as well as transparent reporting. The Commission will expect to see evidence that councils are engaging their communities. This is increasingly relevant given public concern about the potential impacts of some budget decisions, particularly around the closure of leisure facilities and reductions in health and social care services.

It is increasingly important for councils to have strong public performance reporting so that communities understand how their money is being spent, including the increase in council tax, and how this is impacting services and outcomes. We will monitor this public reporting of performance and endeavour to champion those who are clearly making best use of their resources and working with their communities to minimise any negative outcomes of their actions. In May, we will also report on the spending plans of all councils for 2025/26 as part of our annual work to highlight the finances, performance and challenges across local government.

Find out more about our local government overview reporting for 2025.