Scottish Budget 2023/24 – key announcements

A summary of income tax rises and other major changes

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The Scottish Budget 2023/24 was unveiled by the Scottish government on 15 December.

The Deputy First Minister highlighted the exceptionally challenging circumstances for managing public finances against a backdrop of rising prices, deterioration in the economy and the impact of the UK Autumn Statement. This meant certain government plans would have to be delayed, while the capital spending programme would have to be scaled back owing to rising input costs.

The Scottish government set out clear priorities guiding tax and spending plans around:

  • addressing child poverty
  • supporting the most vulnerable people through the cost-of-living crisis
  • sustaining public services.

The headline measure was the decision to add 1p to the higher and top tax rates (up to 42p and 47p respectively), reducing the threshold for the top rate to £125,140 in line with recent changes for the UK, with additional revenue to be ringfenced for spending on the NHS. In all, an extra £1bn of spending has been identified for health and social care.

Starter and basic rate bands are to be maintained at their current level. Also, the additional dwelling supplement (paid as part of the LBTT on additional dwellings) will rise from 4% to 6% from 16 December 2022. At a local level, councils have been told there will be no restrictions on their freedom to increase council tax rates for 2023/24.

The poundage rate for non-domestic rates is to be frozen at current levels (rather than rising by inflation) and a transitional relief scheme will be put in place for the next rate revaluation, which will take place in April 2023.

The small business bonus scheme will be maintained, albeit some reform to the scheme was mentioned, while there was also a suggestion that a new rates exemption would be introduced for certain renewable energy generation and storage equipment.

The Budget will complete its parliamentary process between now and mid-February, meaning further changes are possible, before a final package is agreed by the Scottish Parliament.

Download ACCA’s rates and tables data from our Budget hub.