Island and Crofting Property Council Tax Scotland: Second Home Premiums in Rural Communities

Scotland's islands and crofting communities face some of the sharpest council tax premiums on second homes in the country. Housing shortages mean councils in Orkney, Shetland, the Western Isles and parts of Highland and Argyll and Bute have little hesitation in applying the maximum surcharge — and the 2026 regulations let them go further.

Why Island Councils Hit Hardest

The housing supply problem on Scotland's islands is severe. Properties bought as holiday homes or inherited dwellings left empty directly reduce the stock available to local workers, families and essential service providers. Island councils responded early to the 2024 powers, and most applied the full 100% second home premium from day one.

Shetland Islands Council charges a 100% premium on both second homes and long-term empty properties, with no residual 10% discount. Orkney Islands Council did the same. Argyll and Bute Council — covering a huge area of island and coastal communities including Mull, Islay and Jura — also applies 100% across the board.

With the 2026 removal of the national 100% cap, these councils now have discretion to go higher. Highland Council has already moved to a 200% premium (300% total bill) for the 2026/27 year.

Crofting Properties and Council Tax

Crofting tenure adds a layer of complexity. A croft house that was a family's main residence but is now used only occasionally — perhaps after someone moved to the mainland for work — falls squarely into the second home or empty property classification.

The council tax rules don't contain a specific crofting exemption. A croft house is assessed like any other domestic dwelling: if it's furnished and occupied for at least 25 days a year, it's a second home; if it falls below that threshold, it becomes an unoccupied dwelling that will eventually attract the long-term empty premium.

Crofting land obligations do not create a separate council tax exception. The 25-day test turns on occupation of a furnished dwelling as a second home, not simply visits to the croft for agricultural work.

Exceptions That Apply in Island Settings

The standard statutory exceptions still operate on islands:

• Marketing exception — a property actively marketed for sale or let at a realistic price is protected from the premium for up to 2 years. In island communities where sales take longer due to limited buyer pools, this can be a critical lifeline.
• Job-related dwelling discount — someone required to live in one location for work while maintaining another property gets a mandatory 50% discount with no premium.
• Class A renovation exemption — a property undergoing major structural repair is exempt for up to 12 months. Given the logistical challenges of island construction (materials, contractor availability, weather), the timeline matters.
• New owner grace period — a buyer who acquired an unoccupied property within the previous six months and is carrying out repairs or renovations that contribute to its improvement gets at least 6 months free of the premium from the purchase date, with discretionary extensions available from the council.

Some island council policies include discretionary provisions for construction workers or sales affected by transport restrictions; check the council's current policy for the criteria.

Planning Ahead

If you own a second home or empty property in an island or crofting community, the financial pressure is only going one direction. Our Scotland second home and empty home council tax guide walks through every exemption, exception and discount route — including the evidence requirements that island councils expect and the appeal process if your claim is refused.

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