Local authority leaders are considering appealing to SNP ministers to let them to hike council tax by a capped amount instead of pressing ahead with controversial plans to freeze the charge.

The Scottish Government has pledged that council tax will be frozen in the 2024-25 financial year and has offered £144 million to councils to plug the gap in already-stretched finances by not hiking the charge.

The £144 million is proposed to cover a 5% rise to council tax, but many local authorities had planned to raise the charge by much more amid the dire financial climate.

Read more: Analysis: Scottish council funding business as usual won't cut it

Council bosses have been left frustrated with the Scottish Government, Deputy First Minister and Finance Secretary Shona Robison in particular, and insist the £144 million does not fully fund the council tax freeze.

Cosla, the umbrella organisation for Scottish councils, is also contending with a £63 million cut to local authorities’ day-to-day revenue budgets and a £55 million cut for capital spending for the next financial year, alongside the gap left by the council tax freeze.

Council leaders will hold a crunch meeting through Cosla today before talks between the organisation and Ms Robison this afternoon.

A Cosla financial update, seen by The Herald, sets out that at a meeting last week, Ms Robison stressed that “all available funding has been fully committed for both revenue and capital” budgets.

But according to the document, the Finance Secretary acknowledged that changes to estimates known next month could alter the situation and that she was “open to considering financial and non-financial issues and asks”.

The document states that “consideration could be given to the exploration of options, for example, around securing the £144 million set aside for a council tax freeze in as flexible way as possible, including options around restoration of the £63 million cut to the revenue budget and relaxation around a full freeze on council tax”.

Read more: Scottish councils facing 'unprecedented financial pressures'

It adds: “Leaders are asked to agree officers proceed on this basis in order to inform future political negotiations.”

It is understood that one of those options potentially being considered is for the council tax freeze to be cancelled and a capped rise to instead be agreed.

One source told The Herald that if one council had planned to hike council tax by 8% next year and “have to balance the budget because the SNP has also cut core funding”, then “it seems reasonable” that the local authority “should still get the 5% compensation” from the Scottish Government and “pass on the 3%” increase to households.

The source added that several council leaders are “really angry that the Deputy First Minister and First Minister's announcement to ‘fully fund' council tax has not been delivered” and has “created more funding gaps for us to cover with cuts”.

Read more: Councils pondering hiking council tax despite SNP's freeze

Council officials in Edinburgh have investigated the impact of raising council tax despite the freeze, and concluded that the city council would be better off financially as no penalties have been proposed by SNP ministers.

A report by council officers in the capital sets out that “beyond withholding of funding dependent on freezing council tax rates” by SNP ministers, “it is officers’ understanding that no specific penalties or sanctions would be applied in the event councils choose to raise these”.

Labour leader of Edinburgh City Council, Cammy Day, said: “This is a regressive policy that benefits more well-off in society and is evidenced by many independent think tanks.

"This is the only tax-raising power given to councils and yet again the Government has done us over with their failed promise of fully-funded council tax freeze which will see further cuts to local councils across Scotland.”

Liz Smith, Conservative shadow secretary for finance and local government, said: “It’s no surprise councils, who face yet another huge cut thanks to the SNP’s tax-and-axe budget, should want to challenge the freeze.

“Humza Yousaf announced it, apparently without consulting anyone or thinking about how it would be paid for, just to get a cheap cheer at SNP conference.

“It isn’t even within his power. It was just another SNP promise with no basis in reality, which has undermined and underfunded essential services.”

A Scottish Government spokesperson said: “In the face of a profoundly challenging financial situation, the Scottish Government is making available record funding of more than £14 billion to councils in 2024-25 – a real-terms increase of 4.3% compared with the previous year if the council tax freeze is accepted.

"The £144 million for the council tax freeze would be equivalent to an above-inflation 5% rise in council tax nationally.”