Key findings
1. There is no universal, scientifically robust measure for carbon emissions from peatland to form a basis for tax.
Research suggests that current methods of measuring carbon emissions from peatland do not yet provide the accuracy, fairness or transparency required for a peatland emissions tax at individual landholding level.4 Baseline mapping for peat contains omission and commission errors at the scale of individual holdings. There are many factors that underpin peatland
condition, management and emissions. Failing to accurately account for this complexity risks creating a complex, costly and potentially unfair tax system. A significant amount of work and modelling would be needed to make taxing peatland emissions at an individual landholding level a feasible option. However, regulation of peatland condition could be a feasible option for further consideration.
2. The ownership and tenure implications of a carbon land tax are unclear and could lead to unintended consequences.
There is a challenge in answering ‘who pays’ a carbon land tax. Peatland restoration is a challenge faced by public, private, NGO and community landowners. Research identified that, based on the best available data, 33 landowners are needed to meet the Scottish Government’s 250,000 hectares peatland restoration target.5 If these sites are strategic priorities, it may be feasible to explore options for practical actions and instruments with a smaller number of actors.
There will also be sector and tenure implications and the impact on different ownership structures, tenures and crofts needs to be understood. Identifying who is liable to pay tax without understanding the barriers faced by different types of landowner could lead to significant perverse outcomes. For example, this could lead to potential tensions with Scottish Government land use and rural policy aims including crofting, tenant farming and community ownership. Differential treatment of landowners in the tax system would require strong justification.
Significantly, this research shows that complete and up-to-date data regarding land ownership and liable entities would be required for a carbon land tax to be effective.
3. Tax should be considered as part of a wider, strategic approach to peatland restoration.
Scottish Government currently invests in peatland restoration through its Peatland ACTION restoration programme. It also has at its disposal other approaches, such as conditionality,
grants and payments. Regulation should also be considered as an option for requiring peatland restoration activity.
It is unclear at this stage how a tax or charge would interact with existing efforts to incentivise peatland restoration and government payments in other sectors such as agriculture or forestry. Further work would be needed to identify and map grant recipients of payments against potential payers of the carbon land tax to understand the relationship and entities involved.
It is unclear how a carbon land tax would interact with private investment in peatland restoration and carbon credits. Given the practical challenges, it could carry risks for both landowners and investors or lead to a potential increase in project costs. More broadly, we agree with views that the financial and non-financial barriers to peatland restoration need to be fully understood to identify a specific role for tax, private finance and other mechanisms.6
At this stage, it is unclear how a carbon land tax would adhere to the Scottish Government’s principles for good tax policymaking.7 The case for an additional mechanism such as tax would need to be built on evidence of the impact of existing incentives, such as Peatland ACTION and other available mechanisms, on accelerating peatland restoration. Scottish Government should consider tax as part of a longer term, strategic approach to peatland restoration and alongside a range of levers using the tax policymaking principles as a guide.
4. Local impacts and interaction with other land use objectives need to be understood.
A key assumption for a behavioural tax such as a carbon land tax is that all land management activity must lead to reduction of emissions in peatland. Designing a potential carbon land tax would require the baselining and mapping of peatland condition by individual landholding. More work would be needed to overlay these data sets and build this evidence base. Technologies such as LiDAR could bring opportunities for this.8
In reality, peatland transcends multiple ownership boundaries and often benefits from a landscape-scale approach. In practice, this requires landowners to have the skills, resources and willingness to manage peatland on an ongoing basis. Scotland also has small landholdings with sites of degraded peat, underlining the need for a more flexible approach.
A carbon land tax would, by design, focus land management activities on carbon emissions rather than focusing on overall peatland condition which may take into account broader environmental or local goals. The impacts and unintended consequences on other local factors and interactions with other land use objectives need to be fully assessed and understood. A tax would need to be connected and support delivery of wider policy, such as a Land Use Strategy, land reform or peatland policy.
While reducing carbon emissions and restoring nature is essential for meeting our climate goals, any local tax must consider other policies and local needs. A carbon tax could have significant regional and local economic impact and further research is needed to understand its distributional impacts.
5. A strategic approach to taxing land would create more options for tax to support wider environmental outcomes.
The SLC sees tax as a significant and influential public policy lever to support environmental outcomes and supports the polluter pays principle. However, as it stands, Scotland’s tax and
land data system is not set up to consider environmental outcomes from land such as carbon emissions as our initial findings on a carbon land tax have shown. This work has identified the limits in the current system to support new and innovative tax ideas. A longer-term approach is needed to give Scottish Ministers the option to use tax to help deliver environmental
and land policy outcomes.
In the short-term, we advise that Scottish Government could assess how existing taxes, reliefs and exemption could improve environmental outcomes. In 2022, the SLC reviewed existing devolved taxes and recommended Land and Buildings Transactions Tax and Non-Domestic Rates reliefs, surcharges and new local tax powers to tackle derelict land and support land reform outcomes.
6. Scotland needs a plan to modernise the land and property tax system, starting with bringing land information together.
Building on our 2022 recommendations, we advise that if the Scottish Government wants to use tax to deliver land policy, raise revenue or unlock productivity, it must make land values more prominent in tax policy. We continue to advise that all land should be accounted for on the valuation roll (or equivalent database) and that better integrated land data, use and ownership information is needed to inform tax policy.
To do this, Scotland should develop a modern tax infrastructure to handle current and future government priorities. Research on international valuation and tax systems highlights the importance of accurate, up-to-date and complete data on ownership, value and land use to effectively use tax.9 For example, Scotland alongside the rest of the UK falls behind
in terms of valuation for residential property basing its property values on 1991 house prices. Other countries have been able to create land valuation processes that enable tax to be used as an effective and responsive mechanism to deal with wider societal, economic and environmental changes. This includes the use of technology to help scenario modelling, creating open and transparent systems and a shift to considering environmental factors in land valuations.
To help Scottish Government consider the practical steps needed, we will develop a proposed programme for building a modern infrastructure to support better taxation of land. The experience of tax and land valuation processes in other countries has taught us that transparency, trust and wider public understanding should underpin any such programme. The key
building blocks for a pathway to new taxes are:
- Building a trusted land data and mapping environment to base taxes on.
- Exploring existing and new valuation approaches.
- Understanding the legal framework for new land taxes.
- Identifying and delivering clear land use priorities.
- Understanding wider fiscal and tax implications.
- Resourcing and investing in building a robust system of administration.
We offer to work with the Scottish Government in helping develop and deliver such a programme, while recognising this will require cross government and sectoral support.
4 SRUC (2026) Delivering robust measurement pathways for a Scottish carbon land tax: an evidence review and feasibility study. Available at: https://lunzhub.com/wp/wp-content/uploads/2026/02/ LUNZHub-Calldown-26-Reed-et-al-Carbon-Land-Tax.pdf
5 SRUC (2025) Scottish Peat Emissions and Land Ownership: Meeting restoration targets with the fewest landowners. Available at: https://sruc.figshare.com/articles/report/Scottish_ Peat_Emissions_and_Land_Ownership_Meeting_restoration_targets_with_the_fewest_ landowners/29313782?file=55499039
6 Future Economy Scotland (2025) Restoring Nature to Deliver a Just Transition. Available at: https://www.futureeconomy.scot/publications/133-restoring-nature-to-deliver-a-just-transition-to-net-zero
7 Scottish Government (2021) Framework for Tax. Available at: https://www.gov.scot/publications/framework-tax-2021/pages/4/
8 Scottish Government (2025) Mapping the Future: Scotland’s LiDAR Revolution. Available at: https://blogs.gov.scot/digital/2025/10/03/mapping-the-future-scotlands-lidar-revolution/
9 Scottish Land Commission (2025) WPI Economics: Approach to land valuation in the tax system. Available at: Approaches to land valuation in the tax system https://blogs.gov.scot/ digital/2025/10/03/mapping-the-future-scotlands-lidar-revolution/
