Scottish Land & Estates (SLE) has warned that a Property Income Tax could deepen Scotland’s rural housing crisis, threaten jobs and undermine investment in businesses that sustain countryside communities. The organisation set out its concerns in a release dated 6 November 2026.
The warning followed the UK Budget announcement that rental profits for taxpayers in the rest of the UK will be taxed at 24%, 44% and 49% from April 2027, four percentage points above the main UK Income Tax rates. The increases do not automatically apply to Scottish taxpayers, whose rental profits remain subject to Scottish Income Tax rates. However, the Scottish Government has the power to set separate rates for property income and, according to SLE, is considering its approach ahead of its forthcoming Budget in December.
01Call for a Rural Impact Assessment
In a letter to Housing Secretary Shirley-Anne Somerville and Business Secretary Stephen Flynn, SLE called for the Scottish Government to undertake a full Rural Impact Assessment before considering any changes, and to demonstrate that any additional revenue would outweigh the wider costs to housing provision, employment and economic growth.
SLE said the measure could affect rented housing, visitor accommodation, commercial premises and agreements supporting renewable energy and telecoms infrastructure across farms, estates and other rural enterprises. It warned that additional taxation risks accelerating the withdrawal of rural rented homes at a time when providers already face rising maintenance costs, regulatory pressures and substantial investment requirements, and that higher costs could be passed on through increased rents.
Anna Gardiner, Senior Policy Advisor (Business & Property) at Scottish Land & Estates, said: “Property Income Tax carries serious risks for rural Scotland. It could leave communities with fewer homes to rent, businesses with less money to invest and jobs under threat.”
She added: “Rural rented housing is essential to the functioning of local economies. Families need somewhere to live, employers need homes for their workforce and public services need to attract and retain staff. Another financial burden on housing provision could have consequences far beyond the individual property owner.”
02Diversification and family businesses
SLE also highlighted the potential impact on diversification, which successive governments have encouraged rural businesses to pursue. Income from letting converted farm buildings, providing holiday accommodation or making land available for infrastructure can support employment and investment that agricultural income alone would struggle to sustain, a point that bears on the investment potential of rural properties.
Family businesses operating as sole traders or partnerships could be particularly exposed because their income is generally taxed through the Income Tax system. SLE said there was a real risk of creating a greater burden for these businesses than for incorporated enterprises carrying out similar activities.
Gardiner said: “Taking more money out of these enterprises could undermine the very investment and economic activity that government wants to encourage. The effects would reach local tradespeople, suppliers, employees and tenants.”
She continued: “The Scottish Government should undertake a full Rural Impact Assessment and examine alternative ways of raising revenue with fewer risks to rural communities. The wider economic and social consequences must be thought through when assessing the benefits of any potential change.”
Details and image via Scottish Land & Estates.
