A RADICAL shake-up of council tax will pave the way for higher bills for people living in more valuable homes, Nicola Sturgeon will today announce.

Sources have confirmed the present council tax banding structure will be scrapped to create a wider gap between bills charged for the most and least expensive properties.

At present, local authorities set bills for "average" Band D properties and the rates for the other bands, from A to H, are calculated as a fixed proportion of that.

Under existing legislation, the tax on the most valuable Band H homes is three times as much as on the lowest Band A homes.

Ms Sturgeon will announce plans to scrap the ratios during a visit to a school in Midlothian today.

The moves comes after the cross-party commission found Band H homes were worth 15 times more than Band A properties on average, and concluded the council tax was unfair on the poorest households.

Ms Sturgeon is also expected to announce the creation of extra bands as part of the shake-up.

A source said: "The ratios will go out of the window.

"We want to the new system to be much fairer."

The source said the new system would include protections for people living in large houses but on low incomes, the so-called "asset-rich, cash-poor".

The announcement will mark the end of the SNP's long-cherished goal of replacing council tax with a local incomes tax, sources said.

The Nationalists promised to scrap council tax and bring in a local income tax prior to winning the 2007 election but were forced to abandon the plan two years later amid widespread opposition.

Speaking ahead of the event, Nicola Sturgeon said: "Over nine years, the council tax freeze put in place by this government has helped to keep bills affordable during difficult economic times while ensuring councils are properly funded to provide public services.

“When I established the cross-party Commission on Local Tax Reform in 2015 I wanted to ensure that our commitment to fully understand the impact of taxation on Scottish communities was fulfilled.

“I will outline our proposals for the future of local taxation which build on the findings of the Commission’s report."

The council tax freeze, about to enter its ninth year, was originally introduced as a stop-gap measure until a workable reform of the system could be found.

Last week, Ms Sturgeon unveiled plans to assign councils a portion of income tax to broaden their revenue sources and encourage them to boost their local economy.

It means, in future, they would fund services from a combination of Scottish government grants, council tax and a share of income tax.

The new system will start in April 2017 - if, as expected, the SNP returns to power after May's election - when Holyrood takes almost full control of income tax.

Councils umbrella organisation COSLA gave a cautious welcome to the income tax plan when it emerged last week.

Speaking at the time, Ms Sturgeon said the reforms would be "progressive".

She said: "The commission argued for measures which will make council tax more progressive, and which will give greater assistance to people on lower incomes.

"These changes will be part of a longer term plan to increase the accountability of local councils to the populations

they serve."

She warned against creating a "postcode lottery in terms of tax rates in different local authority areas".

The commission on local tax included representatives of all Holyrood's main parties bar the Conservatives.

A separate commission set up by the Tories recommended a "reformed, fairer" council tax, with greater help for low income households.

Labour and the Lib Dems are expected to set out their plans for the council tax closer to the election.

Councils are facing cuts of between £350million and £500million next year.

A number of local authorities this year considered defying the Scottish Governments council tax freeze in order to raise extra revenue and protect services.

But they backed down after Finance Secretary threatened tough financial penalties if they refused to deliver the freeze and other government policies, including a pledge to maintain teacher numbers.

The prospect of higher council tax bills for people living in larger houses comes as Mr Swinney prepares to outline how he would use Holyrood's new income tax powers.

He is expected to announce plans to raise the top rate of income tax, paid by those earning over £150,000, from 45p to 50p.