In April 2023 most Scottish households faced a 5% increase in council tax, which was broadly in line with the increases in council tax in England, and similar increases were expected for the following year. The First Minister's unexpected announcement at the SNP Conference of a council tax freeze until April 2025 was therefore very welcome news for many householders given the current cost of living crisis where rising prices are putting a strain on many households' finances. Although the council tax freeze will be fully funded by the Scottish Government, to ensure that councils can continue to deliver essential services, there has been some criticism of the announcement as many believe that setting the rates of council tax should be a matter for local authorities and not for central government.

One area where council tax will not be frozen, however, relates to the council tax on second homes. For council tax purposes a second home is ‘a dwelling which is no one’s sole or main residence and that is lived in for at least 25 days during the 12-month period of the Council Tax charge". A joint Scottish Government/COSLA consultation on council tax for second and empty houses took place between April and July 2023 which considered giving councils the power to increase the council tax on second homes as well as increasing the 100% premium on council tax on homes which have been empty for at least 12 months. The consultation also considered whether some types of property should be exempt from the increased council tax charges.

The Scottish Government's Rural and Islands Housing Action plan published on 13 October 2023 confirmed that legislation will be introduced to allow councils in Scotland to apply a 100% premium on council tax for second homes from April 2024. This will bring the council tax treatment of second homes into line with long term empty homes, where councils can already charge a premium of 100%.

According to Scottish Government statistics, as of September 2022 there were over 24,000 second homes in Scotland, amounting to 1% of all residential housing stock. Making best use of these existing houses is a key part of the Rural Housing Action plan, and the proposed increase in council tax for second homes is intended to bring more residential properties back into use as dwellings.

Under existing council tax rules, second homes are given a discount of up to 50%, but councils can vary the discount down to 0%, and most councils already charge the full council tax rate on second homes. Many of the Scottish councils have indicated that if the power to charge a 100% premium on the council tax for second homes is introduced, they would make use of that power.

The increase in council tax on second homes in Scotland mirrors similar measures introduced in England under the Levelling Up and Regeneration Act 2023, which allows councils to charge a premium of up to 100% on furnished housing not used as a sole or main residence. In Wales, local authorities have had the power to increase the rate of council tax on second homes and long term empty properties by up to 300% since April 2023.

Using council tax rates to manage the number of long-term empty homes, short-term lets and second homes has clearly become an accepted part of housing policy.


Isobel d'Inverno

Director of Corporate Tax