Introduced on 5 June 2025 as an initiative to fund building safety expenditure in Scotland, the Building Safety Levy (Scotland) Bill proposes a new tax which, if passed, will be known as the Scottish Building Safety Levy (“the Levy”). 

While much of the detail would follow in secondary legislation, the Bill sets out the legislative basis for the proposed new tax, explaining when it could be chargeable, which buildings could be taxable and how, potential exemptions, and who could be liable to pay.

The Scottish Government has anticipated that the Levy would raise £30 million a year, to be used in its Cladding Remediation Programme. This comes as recent estimates by the Scottish Government suggest that over a 15-year period, public sector capital spend to assess and undertake essential remedial works on residential buildings over 11 metres could cost in the range of £1.7 billion to £3.1 billion. Further details of the cost of cladding remediation have been set out by the Scottish Government and can be found here.

When could the Levy be payable?

If the Bill secures Parliamentary approval, in keeping with other fully devolved taxes, secondary legislation and work by Revenue Scotland will be required before the Levy can be formally introduced. This will occur following primary legislation, which is likely to be passed in summer 2026, and a period for regulations to be generated. Meantime, the Scottish Government has said the Levy is intended to come into effect on 1 April 2027. However, there has been no indication that the Levy will not apply to ongoing developments after this date, regardless of when the contract was entered into. 

Where applicable, the Levy would be chargeable at certain taxable “building control events”. This includes the “building completion date” i.e. the date of acceptance of a completion certificate under the Building (Scotland) Act 2003 (or if earlier, the grant of permission for temporary occupation), where a “new residential unit” is created.

Which buildings could be taxable?

The Levy is set to apply to any such “new residential units”. This means the whole or part of a constructed or converted building which on the building completion date, is intended to be (or is) used as a dwelling or other accommodation. 

The Bill explicitly considers a building to be a new residential unit if it is used for any of the following purposes:

1. residential accommodation for students in further or higher education;
2. a hall of residence for students in further or higher education; and
3. residential accommodation built for the purpose of occupation by tenants. 

Calculation of the Levy

In calculating the Levy payable on a building control event, the key factor would be the floorspace area (in square metres) of the new residential unit. 

The Bill provides that Scottish Ministers will make regulations specifying the rate (or rates) of the Levy. Rates may differ depending on factors such as the geographical area, types of land, or indeed any factor which the Scottish Ministers consider appropriate. Once the relevant rate has been identified, the Levy will be calculated by multiplying the rate by the square meterage of the floorspace of the new residential unit. 

The Bill also provides Scottish Ministers with a range of further powers to make regulations regarding the methodology used to calculate the floorspace, providing reliefs in respect of the Levy and introducing a Levy-free allowance in respect of building control events within an accounting period. 

Exemptions

The Bill also introduces the concept of “exempt new residential units”. This acts as a carve out for certain buildings, which would otherwise be classified as intended for use as a dwelling or other accommodation and would be subject to Levy. Such exemptions include:

• buildings intended to be let for social housing;
• buildings funded as affordable housing, for which construction funding has been provided (under sections 1 or 2 of the Housing (Scotland) Act 1988, or section 92 of the Housing (Scotland) Act 2001);
• any building located on a Scottish island; and
• Pre-existing residences, which have been subject to construction or conversion, that have not resulted in a change to the number of the parts of the building which are intended to be (or are) used as dwellings (i.e. if the construction/conversion resulted in an increase in the number of parts of the building used as a dwelling, the exemption would not apply).

Who would be liable? 

In basic terms, the “owner” of the new residential unit would be liable to pay the prospective Levy. The owner would be identified at the time of application for the practical completion certificate, rather than at the time of its issue.

This means that for a typical new build plot sale, the owner would be the developer. However, for a sale comprising a land sale with an associated construction contract or development, the owner would be likely to be the end user, rather than the developer. 

In a group company situation, the Bill also allows for two or more bodies corporate to be treated as members of a group. While each group would require to have a representative member, each member of the group is jointly liable to pay the Levy. 

Conclusion 

The introduction of the Bill was expected following the development of the UK Government’s Building Safety Levy, which applies to developments in England. This was followed by a consultation process in Scotland (see our previous blog here) and the powers given to the Scottish Parliament to introduce the Levy as a devolved tax in Scotland.

There is some time before the Levy would come into effect. However, developers will already be eager to understand the potential exemptions, reliefs and of course, applicable rates. This is particularly because the Levy may apply to ongoing projects, meaning the potential impending costs are already a consideration in upcoming and ongoing developments which are likely to continue past April 2027. There is much detail to come in the Regulations which would follow, which we will continue to report on as they unfold.

Our Building Safety Group brings together specialists in construction, real estate, health & safety law and dispute resolution to help clients navigate this complex area of law. If you would like to discuss any of the issues raise, please get in touch.

You can find previous insights on building safety here. 

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