Scottish Budget: 18th December 2023

The Scottish Government’s Finance Secretary, Shona Robison, set out her budget for 2024/25 on 18th December 2023.

This was in the wake of the UK budget being announced on 22nd November 2023, where the Chancellor, Jeremy Hunt, announced a reduction in National Insurance for employees from 6th January 2024 and the self-employed from 6th April 2024.

The Scottish Government has control over the rates of income tax for non-savings, non-dividend income; meaning the rate of tax people pay on most income from employment or self-employment.

The UK Government retains control of the personal allowance, savings and dividend income tax rates, as well as National Insurance Contribution rates and thresholds.

There had been speculation that the Scottish Government would introduce a further tax band between the Higher and Top rates, in order to help balance the budget and raise extra income.

Shona Robison confirmed that there would be no changes to the rates of income tax for everyone earning below £75,000, but the basic and intermediate rate bands will be uprated by inflation. She announced the introduction of a new income tax band, the Advanced rate, charged at 45% on income between £75,000 and £125,140. The finance secretary also announced an increase of 1 percentage point on the Top rate of income tax, bringing this rate to 48%.

The finance secretary announced today that the rates of income tax for Scottish Taxpayers would be as follows:

2024/25 (Applicable from 6th April 2024)

BandOn income…Rate
Starter rateFrom £12,571* to £14,87619%
Scottish basic rateFrom £14,877 to £26,56120%
Intermediate rateFrom £26,562 to £43,66221%
Higher rateFrom £43,663 to £75,00042%
Advanced rateFrom £75,000 to £125,14045%
Top rateOver £125,14048%

*Assumes that an individual is in receipt of the standard personal allowance. The personal allowance is reduced by £1 for every £2 earned over £100,000.

The effect of the above is that anyone earning less than £75,000 will pay slightly less tax than in 2023/24.

Business Rates

The poundage rate for Non-Domestic Rates (NDR) will be retained for 2024/25 at 49.8p, but the intermediate and higher rates will be increased by inflation.

The finance secretary also confirmed 100% relief to hospitality properties in island communities.

Council Tax

The council tax freeze, previously announced by the First Minister, was confirmed by Shona Robison in her budget.

Other Devolved Taxes

There were no changes to Land and Building Transaction Tax (LBTT) in this budget. Scottish Landfill Tax (SLfT) will be increased by inflation to match the equivalent UK tax.

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