The Scottish Budget 2022/2023

The details of the Scottish Budget for 2022/2023 were announced on 9 December 2021. The Budget is mainly targeted at business recovery, the transition to “net zero” carbon emissions and tackling child poverty.

Scottish Income Tax Rates

• Scottish Income Tax rates in 2022/2023 will remain unchanged
• The starter and the basic rate bands will increase in line with inflation
• The higher and top rates will remain frozen at their current levels

Bands	Band name	Rate
Over £12,570 * – £14,732	Starter Rate	19%
Over £14,732 – £25,688	Scottish Basic Rate	20%
Over £25,688 – £43,662	Intermediate Rate	21%
Over £43,662 – £150,000 **	Higher Rate	41%
Over £150,000**	Top Rate	46%

*             assumes individuals are in receipt of the Standard UK Personal Allowance.

**          those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

Scottish Business Rates

• Non-Domestic Rates will be set at 49.8p in the pound – an increase of 0.8p
• The 100% rates relief for the retail, hospitality and leisure sectors will end on 31 March 2022

There will then be 50% rates relief for these sectors for the first three months of 2022/2023 capped at £27,500 per ratepayer

• A small business, with a rateable value of less than £15,000 on a Scottish high street will continue to pay no rates for 2022/2023 irrespective of which sector they operate in, through the Small Business Bonus Scheme
• A new build in a Scottish town will pay no rates for the first 12 months after occupation, through the Business Growth Accelerator.

Scottish Council Tax Rates

• Scottish Councils will have complete flexibility to set Council Tax rates for 2022/2023

These were frozen for 2021/2022 due to the Covid-19 pandemic

Land and Buildings Transactions Tax

The rates and bands for Land and Buildings Transaction Tax for both residential and non-residential properties will be kept at their current levels

Band	Consideration	Rate
Nil Rate Band	Not more than £145,000	0%
First Tax Band	£145,001 – £250,000	2%
Second Tax Band	£250,001 – £325,000	5%
Third Tax Band	£325,001 – £750,000	10%
Fourth Tax Band	More than £750,001	12%

The Scottish Government will shortly launch a call for evidence and views on changing the Additional Dwellings Supplement (ADS). This is currently 4% on all relevant residential purchases above £40,000.

Scottish Landfill Tax

The standard rate of Scottish Landfill Tax will increase to £98.60 per tonne and the lower rate to £3.15 per tonne in 2022/2023 to maintain consistency with the rest of the UK.

Air Departure Tax

The Scottish Government remains committed to introducing Air Departure Tax (ADT) when a solution to the Highlands and Islands exemption issue has been found.

Until ADT is introduced, the UK Government will maintain the application of Air Passenger Duty in Scotland.

https://revenue.scot/taxes/air-departure-tax

VAT Assignment

The Scotland Act 2016 allows for the first ten pence of standard rate VAT receipts and the first 2.5 pence of reduced rate VAT receipts raised in Scotland to be assigned to the Scottish Government (known as VAT assignment). As VAT receipts for Scotland are not identifiable from tax returns, assigned VAT will be based on a model of expenditure in Scotland.

VAT assignment had been expected to be fully implemented in April 2021, but a postponement was agreed due to the exceptional levels of economic uncertainty generated by COVID-19 and Brexit, with a commitment to review implementation as part of the wider Fiscal Framework Review.

Other announcements

• The Scottish Child payment will be doubled to £20 per week from April 2022
• A minimum wage floor of £10.50 per hour for all adult social care staff and all employees covered by the Public Sector Pay Policy
• The Public Sector Pay Policy will guarantee an inflationary uplift of at least £775 to those earning up to £25,000, £700 to those earning between £25,000 and £40,000, and £500 to those earning above £40,000.
• £200 million for the Scottish Attainment Challenge – the next instalment of the Scottish Government’s commitment to provide £1 billion over this Parliament to tackle the poverty-related attainment gap
• Over £4 billion across social security and welfare payments, providing support for low-income families, carers and disabled people, including £1.95 billion to start delivery of the Adult Disability Payment next year
• £41 million for the Scottish Welfare Fund to help people in times of crisis
• £80.2 million in Discretionary Housing Payments
• £110 million to provide free bus travel for young people from January to encourage more use of public transport
• Over £70.2 million for the continued expansion of free school lunches – providing lunches for all children in P1-5 and special schools, and supporting the infrastructure required to roll-out lunches to all primary children
• £544 million to deliver free funded early learning and childcare for three and four year olds, and two year olds from lower income households, while taking forward work to expand that to one year olds from low-income households within this Parliament
• £831 million for affordable housing to progress the Scottish Government’s commitment to deliver 110,000 affordable, energy efficient homes across the next decade, leveraging private sector investment and supporting employment in the construction sector
• Investment of over £225 million in Skills Development Scotland to support a range of national training interventions.
• £370 million to support enterprise agencies and around £50 million for VisitScotland, to strengthen key sectors, like tourism, to promote innovation and achieve sustained success in new and emerging markets
• £205 million in capitalisation for the Scottish National Investment Bank This is to help the bank “deliver against its missions of supporting Scotland’s transition to net zero, building communities and promoting equality and harnessing innovation”
• £336 million for energy efficiency, and low carbon and renewable heat including £60 million for large scale heat decarbonisation projects
• £53 million across a range of energy transition and industrial decarbonisation projects
• £23.5 million for the Green Jobs Fund to help businesses create green employment through investment
• Investment of £150 million in infrastructure to make walking, wheeling and cycling safer
• £1.4 billion to maintain, improve and decarbonise Scotland’s rail network
• £43 million to drive forward Scotland’s circular economy
• £53 million to restore Scotland’s natural environment, including the internationally important peatlands
• £25 million to start work on transforming farming and food production in Scotland to be world leading in sustainable and regenerative agriculture
• £69.5 million to be invested in woodland creation and sustainable management of Scotland’s woodlands

https://www.gov.scot/publications/scottish-budget-2022-23/

https://www.gov.scot/publications/budget-statement-2022-23/

The information in this blog provides only an overview of Scottish Government guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed Scottish Government guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.