Shona Robison, the Deputy First Minister of Scotland and Cabinet Secretary for Finance, today set out the Scottish Government’s budget for 2024-25. Headline announcements include a freeze in the basic rate of non-domestic rates, but an additional income tax band and higher taxes for the top 5% of earners. Today’s budget was set in the context of a 1.2% real terms fall in the block grant since 2022-23, yet an unexpected improvement in tax incomes driven by higher earnings growth.

The key announcements for business are summarised below – as always if you have any feedback or would like to speak to our policy team about any of these policies, get in touch at policy@edinburghchamber.co.uk

Income tax

• There will be no changes to the Starter, Basic, Intermediate or Higher rates of income tax
• An additional 1p will be added to the Top rate, increasing the rate from 47p to 48p on income over £125,140
• The thresholds for Starter and Basic bands will increase in line with inflation (to £14,876 and £26,561 respectively), however the thresholds for Higher and Top bands will be frozen, bringing in an additional £327m in tax
• As trailed in the press, a new income tax band will be introduced – the Advanced rate. This will apply on incomes from £75,000-£125,140 and will be taxed at 45p, raising a further £82m for Government budgets
• These changes will take effect from 6^th April 2024

Non-domestic rates

• The poundage will be frozen on the basic property rate (for properties with a rateable value up to and including £51,000) at 49.8p
• However the intermediary (properties with a rateable value of between £51,001 and £100,000) and higher rates (rateable value above £100,000) will see increases in line with inflation – 54.5p for intermediary rate properties and 55.9p for higher rated properties
• All existing NDR reliefs including the small business rates relief will be maintained, including the transitional relief schemes announced last year for properties who saw large increases in rateable values following the 2023 revaluation
• Disappointingly, the 75% rates relief for retail, hospitality and leisure businesses in England has not been replicated in Scotland as hoped. However a 100% relief will be offered in 2024-25 for hospitality businesses located on islands
• The 90% renewables District Heating relief will be extended until 31^st March 2027
• The Government have committed to working with the New Deal for Business group to explore long-term targeted solutions for the hospitality and retail sector, including examining the valuation methodology for the hospitality sector

Other taxes

• There will be no changes to the Land and Buildings Transaction Tax rates or bands
• Landfill tax: both the standard and lower rates will increase, in line with UK-wide increases
• Council tax will be frozen for 2024-25
• The Government is exploring the introduction of a Cruise Ship Levy
• They are also exploring the reintroduction of a non-domestic rates Public Health Supplement for large retailers in advance of the next Budget

Investment and other commitments

• On planning, the Government has committed to bringing forward a range of options to accelerate the planning system in a consultation paper to be published in early 2024
• On affordable housing, they will invest over £550m to deliver houses for social rent, mid-market rent and low cost home ownership
• Investment in digital connectivity will increase from £93 million to £140 million
• £9 million will be invested to expand the Techscaler programme
• £67m will be invested as the first payment in a 5 year project to leverage private investment in infrastructure and manufacturing facilities for offshore wind sector
• £358m to accelerate energy efficiency upgrades and installation of clean heating systems
• £49m to progress the transition to a circular economy
• Funding for culture will be increased by £15.8m
• The Government will continue to invest in a more flexible childcare system and grow the workforce
• £90m will be invested in employability services, providing support to those wanting to re-enter the workforce
• £2.5bn to be invested in public transport
• Spending will be increased on frontline NHS services, social care, education and skills system, and other public services such as police and fire and rescue service

The full budget can be found here.