Scottish Government publishes indicative rates for the Scottish Building Safety Levy, helping developers prepare ahead of its launch in April 2028.
The Building Safety Levy (Scotland) Act 2026 was passed in March 2026 and received Royal Assent on 13 May 2026.
It introduces a new levy on certain residential developments, payable at a particular defined stage in the building control process. The levy is intended to ensure that the development sector contributes to the costs of improving building safety, particularly the Scottish Government’s Cladding Remediation Programme.
The levy will commence on 1 April 2028 and be administered by Revenue Scotland.
What type of residential developments are affected and are there any exemptions?
The levy is to be charged on the construction or conversion of residential property developments. Its scope includes build-to-rent accommodation and purpose-built student accommodation.
There are some exceptions and exclusions, for example, certain forms of temporary or institutional residential accommodation, pre-existing residences, social housing, certain affordable housing, and new residential units constructed on an island.
There is also provision for an annual levy-free allowance; in each financial year, 29 building control events may be deducted before calculating the building control events on which the levy is payable. The Scottish Government commentary on the levy-free allowance states that:
“The Levy Free Allowance removes from the scope of the levy an estimated 85% of developers, meaning smaller developers will have no requirement to interact with or pay the Levy. Those building over 29 units also benefit from the Allowance – a medium-sized developer building 50 units per year (after other exemptions have been applied) would see the majority of their units removed from charge through the application of the Allowance.”
It should be noted that by virtue of Section 6 of the Act, the Scottish Ministers do have power to make regulations to amend the various exceptions and exemptions.
Indicative rates
The Scottish Government has now published indicative rates for the levy, including the methodology used to calculate rates and an assessment of expected impacts ahead of its introduction in April 2028.
In setting out indicative rates, the Scottish Government seeks to give developers advance notice of more than 20 months of their likely levy liabilities to provide clarity for future planned developments.
A tax rate has been set for each local authority area, considering various factors, such as average house prices, average home sizes and the estimated number of units developed.
Section 10 sets out how the levy liability is calculated: the chargeable floorspace of each liable unit is multiplied by the relevant local authority levy rate.
The expectation is that the rates will be set for a period of three years, but they can be reviewed and altered at a different frequency if conditions necessitate this.
Relief for brownfield sites
As can be seen from the table of indicative rates, the headline rate is based on units developed on greenfield land. A relief is given for developments built on brownfield land (set at a minimum of 50%) and this is to acknowledge the role of redevelopment in regeneration and efficient land use.
Further consultation
A further consultation has also been launched to seek views on the methodology used to determine floorspace, options for further exemptions and reliefs, and payment flexibilities for certain development types but the commentary on this consultation states that the outcome of the consultation is not expected to lead to any adjustment of the published rates.
Next steps in the Scottish Government timeline
- The rates require agreement from the Scottish Parliament.
- The Scottish Government needs to bring forward the relevant regulations before the levy takes effect.
- A full and final impact assessment of the levy will be published at the same time as the Scottish Government’s response to the consultation (which closes on 9th October 2026).
Is there going to be a similar levy introduced in England?
It should be noted also that an equivalent tax is also being developed in England, and in November 2025, the Building Safety Levy (England) Regulations 2025 were passed and the levy is expected to come into force in England on 1 October 2026.
How to prepare
We would advise developers to assess the likely impact of the levy now by considering proposed future development plans against the following points:
- Is your proposed development in scope or will it fall into one of the exclusions or exceptions?
- Is your proposed development on greenfield or brownfield land?
- Will the proposed development benefit from the levy-free allowance noted earlier in this note?
- Can you begin to prepare financial models to assess the likely financial impact of the levy and the impact on development viability?
- Plan for the levy early: incorporate it into appraisals, funding structures and contractual provisions dealing with cost allocation.
Further information
We will review the secondary legislation when published and will issue a further update at that time.
For further information in the meantime on any aspect of the levy or assistance in relation to assessing whether your development might be in scope, please contact Ruth Maclean, Paul Lombardi, or Neil Fraser.