The Scottish Government outlined their budget proposals for 2023-2024 today, on 15th December 2022. These proposals set out the tax and spending plans for the next couple of years and follow on from the UK Governments Autumn Statement of 17th November, outlined in our blog post here. The Scottish Government has limited taxation powers, including some control over Income Tax Rates and Land and Business Transaction Tax (LBTT, the equivalent to Stamp Duty in England and Wales). We note the main measures that affect our clients below:
The Scottish Parliament has the power to set the Income Tax rates and bands for the non‑savings, non‑dividend income of Scottish taxpayers. Responsibility for the remainder of the Income Tax system, which includes all reliefs and exemptions, and setting the UK-wide Personal Allowance and associated taper rate, are reserved to the UK Parliament. Income Tax on savings and dividends income is also reserved.
Changes announced in the budget today to income tax rates include a 1p uplift in the rate of tax paid by Higher and Top rate taxpayers to leave the tax bands and rates as follows:
Starter Rate £12,571 – £14,732* 19%
Basic Rate £14,733 – £25,688 20%
Intermediate Rate £25,689 – £43,662 21%
Higher Rate £43,663 – £125,140 42%
Top Rate Above £125,140** 47%
* 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
Land and Buildings Transaction Tax
LBTT is a tax applied to residential and non‑residential land and buildings transactions (including commercial leases) where a chargeable interest is acquired. The Additional Dwelling Supplement (ADS) is payable, as part of LBTT, on purchases of all relevant residential properties for £40,000 and above.
The significant change announced here is the ADS rising to 6% from 4%. This rate applies to the total price of purchasing a second property.
The standard LBTT bands and Rate will remain as follows:
Up to £145,000 0%
Above £145,000 to £250,000 2%
Above £250,000 to £325,000 5%
Above £325,000 to £750,000 10%
Over £750,000 12%
Non Domestic Rates, often known as business rates, are in the process of being revalued to take effect from 1st April 2023. Revaluation notices are currently going out to properties across Scotland.
However, the Scottish Government announced that the “poundage”, i.e. the multiplier of the Business Rate Valuation that calculates the actual rates charged, will remain the same at the following rates:
Basic Property Rate (‘Poundage’) 49.8p
Intermediate Property Rate (rateable values between £51,001 and £100,000) 51.1p
Higher Property Rate (rateable value above £100,000) 52.4p
The Small Business Bonus Scheme, which gives relief for Business Rates for Small Businesses, has extended its eligibility and new tapers applied. Full details here of this change and all others are here.
If you would like help with your business tax, please don’t hesitate to get in contact by filling out our contact form, and we will get right back to you. The contact form is here.