'A budget by Scotland, for Scotland', tax highlights of the Scottish Budget 2024 speech given by Shona Robison, Cabinet Secretary to the Scottish Parliament on Wednesday 4 December 2024.
The Budget is set for the years 2025 to 2026.
Income Tax
The Scottish Government does not intend to introduce any new bands or change the rates for Income Tax. It is modifying the lower bands:
- The two lowest Income Tax thresholds, the Starter Rate and the Basic Rate, will increase to £15,397 (from £14,876) and £27,491 (from £26,561) respectively, with a promise to continue to uprate these thresholds by at least inflation for the duration of the parliament.
- The Higher, Advanced and Top Rate thresholds will remain at their current levels of £43,662, £75,000 and £125,140.
Land and Buildings Transaction Tax (LBTT)
- The Additional Dwelling Supplement will increase from 6% to 8% from 5 December 2024.
- This increase will not apply to transactions for which legal missives have been signed on or before 4 December 2024.
- A range of different reviews and consultations are planned:
- In Spring 2025, a review of LBTT, to support an evaluation of key aspects of the tax legislation.
- In early 2025, a consultation on draft legislation to provide relief from LBTT on the exchange of units within Co-ownership Authorised Contractual Schemes (CoACS) investing in Scottish property.
- A consultation to seek views on the case for introducing an LBTT relief for the seeding of properties from existing unauthorised investment vehicles into Property Authorised Investment Funds (PAIFs) and CoACS.
- In early 2025, legislation will also be laid before parliament to provide additional clarity on the clawback arrangements for sub-sale development relief and to provide for the availability of LBTT group relief for non-partition demergers.
Landfill Tax
New rates will apply from 1 April 2025:
- Landfill Tax rates will increase to £126.15 per tonne, with a lower rate increase to £4.05 per tonne.
- Landfill operators will remain able to contribute a maximum of 5.6% of their tax liability to the Scottish Landfill Communities Fund (SLCF) in 2025-26.
Rates
The last revaluation took effect on 1 April 2023 with a tone date of 1 April 2022. The next revaluation is scheduled for 1 April 2026 with a tone date of 1 April 2025.
From 1 April 2025 councils will be able to retain 50% of additional Non-Domestic Rates (NDR) revenue raised from the use of their anti-avoidance powers under the Non-Domestic Rates (Miscellaneous Anti-Avoidance Measures) (Scotland) Regulations 2023.
The main announcements focused on Business rate reduction for hospitality and small business:
- For small businesses, the Basic Property Rate remains frozen. This is charged to properties with a rateable value up to and including £51,000, at 49.8p.
- Other rates will rise by inflation: the Intermediate Property Rate, which applies to properties with a rateable value of between £51,001 and £100,000, will be charged at 55.4p and the Higher Property Rate of 56.8p will be charged on properties with a rateable value above £100,000.
- Relief will continue at 40% relief in 2025-26 to properties in the hospitality sector (including Grassroots Music Venues with a capacity of up to 1,500) which are liable for the Basic Property Rate (those with a rateable value up to and including £51,000), capped at £110,000 per business.
Planned new legislation
To be introduced in 2025-26:
- A Building Safety Levy in Scotland. This will be equivalent to a Levy that the UK Government intends to introduce in England. The Scottish Building Safety Levy will provide vital revenues to support the funding of the Scottish Government’s Cladding Remediation Programme.
- The Scottish Government has intensive work underway to explore a potential Cruise Ship Levy.
Other plans:
- The Scottish Government remains committed to introducing Air Departure Tax (ADT) and continues to explore all options to implement the tax.
- The Scotland Act 2016 gave the Scottish Parliament the power to introduce a devolved tax to replace the UK Aggregates Levy in Scotland.
- The Aggregates Tax and Devolved Taxes Administration (Scotland) Act, which received Royal Assent in November 2024, makes provision for key elements of the Scottish Aggregates Tax. Subject to the approval of the necessary Scottish and UK secondary legislation, the Scottish Government intends that the introduction of a Scottish Aggregates Tax will occur on 1 April 2026.
Benefits
- Mitigation of the two-child benefit cap, with work starting in 2025 with the aim of abolishing the cap.
- This requires cooperation from the Westminster Government.
Spending plans
After being critical of the Labour budget's increase in National Insurance, the minister highlighted in her speech key areas where the government will direct its spending plans covering:
- Record investment in NHS.
- Winter heating allowances for pensioners.
- More affordable homes and energy-efficient homes.
- Funding for school breakfast clubs.
- Support for the disabled.
- Support for local council spending.
- Measures for climate action.
- Culture spending increases.
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