From 1 April 2028 the Scottish Building Safety Levy (the Levy) will be charged on completion of new residential units in Scotland. This forms part of the Scottish Government’s Cladding Remediation Programme and Levy proceeds must be used to remediate unsafe external wall cladding systems.

Published: 18 February 2026
Last updated: 7 August 2026
Author: Lewis Ritchie & Mandy Soppitt

The underlying legislation (the Building Safety Levy (Scotland) Act 2026) was passed by the Scottish Parliament in March 2026 and the Scottish Government has recently published:

• indicative levy rates and
• a technical consultation on outstanding aspects of operating the Levy.

Both are significant for PBSA, BTR and traditional models of residential development and are summarised here.

At a glance, the key points to note about the Levy at this stage are:

• this is the Scottish equivalent of the levy which will apply to developments in England from 1 October 2026
• there are no transitional arrangements meaning that residential units in progress - but not complete - before 1 April 2028 will be subject to the Levy
• the Indicative rates show a bespoke rate of tax for each local authority area to reflect average house prices, home sizes and the estimated number of units in that area. For greenfield sites the rates range from £23.17 per square metre in Dumfries and Galloway to £48.46 in Edinburgh
• brownfield sites will benefit from a minimum 50% relief. The consultation explores how “brownfield” should be defined and asks whether this rate should be higher
• full or partial relief is being considered for units sold to first-time buyers
• developers have an annual Levy-free allowance of 29 units
• there are some Levy exemptions: for affordable and social housing and new residential units constructed on Scottish islands. In addition, the consultation asks whether relief or exemption should be applied to conversions of existing buildings and if so, whether this should cover non-residential buildings, residential buildings or both
• build-to-rent (BTR) and purpose-built-student accommodation (PBSA) properties are specifically included. However, in response to industry concerns about the Levy’s impact on cash-flow for such developments (where all/a number of units are completed and will trigger a charge at the same time), the consultation asks if BTR and PBSA sites with building warrants granted before 5 June 2025 (when the legislation was introduced to the Scottish Parliament) should be given the option to pay over an extended period of up to three years
• on a practical level, the Levy will be collected by Revenue Scotland (compared with local authority collection for developments in England)
• secondary legislation will be required when the rates are approved by the Scottish Parliament and the consultation responses have been reviewed
• further detail is set out below.

Liability

The person liable to pay the Levy is the building owner at the time of either:

• submission of a completion certificate to the verifier, or
• application for the grant of temporary occupation.

This shifts the financial burden from homeowners to residential developers, making it an additional cost to factor into new residential projects. While this aligns with broader policy objectives, it does introduce a new viability consideration for developers.

When will the Levy be due and how will it be calculated?

The Levy becomes due when a completion certificate is accepted or temporary occupation permission is granted. The legislation provides for payments to be calculated in the accounting periods for a financial year - ending on 31 March unless otherwise set by Scottish Ministers - and to take into account the developer’s annual Levy-free allowance of 29 units and applicable reliefs.

The Levy will be calculated by applying the relevant rate to the floorspace area (in square metres) of the new residential unit.  More detail of the calculation is provided in the consultation which proposes that:

• floorspace should be measured using Gross Internal Area as set out in the RICS Code of Measuring Practice 6th Edition (this is consistent with the equivalent levy for England).
• communal areas of a building e.g. shared entrances, stairs and facilities such as gyms and residents’ lounges in BTR developments would not be chargeable.
  
  The Scottish Government hopes that this approach, which contrasts with that for the English levy, will incentivise high-density development and BTR and PBSA projects which typically have more areas of communal space. For PBSA it is worth noting that the communal entrance/stairs and facilities (e.g. study hubs, laundry) for use by all the building’s residents would not be chargeable but the shared kitchen and bathroom facilities within the residential unit of each cluster flat would form part of the taxable space.

Properties included

The Levy applies to new units that are used or are "intended to be used as a dwelling or other accommodation". The legislation specifically includes residential accommodation for occupation by students and tenants. Hotels are not included.

Exemptions

To ensure that that Levy does not exacerbate the challenges to disadvantaged housing sectors, not all residential development will be subject to the Levy including:

• affordable housing: Consistent with its commitment to building 110,000 affordable homes by 2032, housing delivered through the Scottish Government’s affordable housing supply programme will be exempt from the Levy
• social housing: Housing to be let under a secure tenancy by any party such as a local authority, registered social landlord or private developer will also be exempt
• units constructed on Scottish islands will be exempt
• in addition, the consultation asks whether relief or exemption should be applied to conversions of existing buildings and if so, whether this should cover non-residential buildings, residential buildings or both.

Reliefs

Brownfield sites will benefit from a minimum 50% relief. The consultation explores how “brownfield” should be defined and whether this rate should be higher.

Full or partial relief is being considered for units sold to first-time buyers.

Penalties

Penalties will apply: for failure to make a return, pay the Levy and failure to register for the Levy. Enforcement is not expected to go so far as to withhold or reject a completion certificate because of non-compliance.

For how long will the Levy apply?

The Levy will apply to new units completed from and including 1 April 2028. Despite concerns raised during the legislative process there is no fixed end date for the Levy – instead the Scottish Ministers are obliged to report every three years on how the proceeds of the Levy have been used and the work funded by it.

Looking ahead

The rates are not yet final (they will require approval from the Scottish Parliament and implementing regulations) but it is hoped that they will assist cost planning for developments due to complete after 1 April 2028. The technical consultation closes on 9 October 2026 and secondary legislation will follow. Please do get in touch if you would like more information in the meantime.