Delay down to Brexit and general election

How is the Scottish Budget set and where does the money come from?

Timing:

As a result of December’s election, as well as the Brexit gridlock, Boris Johnson’s government did not set a budget in the autumn – to the chagrin of the Scottish Government.

Despite the indignation, the UK Government maintained there was “nothing stopping” a Scottish Budget.

Mr Mackay said he would present a budget before the UK Government so councils could be better briefed on their own revenue plans prior to the end of the financial year.

Revenue raising:

Around 40% of Scottish Government spending each year is raised from taxation. When control of air passenger duty, aggregates levy and VAT raised in Scotland is fully devolved the Scottish Government hopes this can rise to as much as 50% of its revenue.

The Fiscal Framework, an agreement between the Scottish and UK governments which guides the block grant from Westminster to Holyrood, is impacted by projections on how much the Scottish Government will raise over the coming years through taxation.

Income tax:

Income tax is collected UK-wide by HMRC and remains the responsibility of the UK Government.

HMRC also determines who is and is not a Scottish tax payer. The Scottish Government can, however, set tax band thresholds and rates, as a result of the Scotland Act 2016.

Air departure tax:

The Scottish Government has the power to introduce air departure tax – formally air passenger duty – but SNP plans to cut it have been repeatedly delayed.

The party had originally planned to abolish the charge but following pressure from environmentalists and the party’s pivot on the “climate emergency”, the manifesto changed.

Land and Building Transaction Tax (LBTT):

This replaced UK Stamp Duty Land Tax in Scotland in April 2015.

It is applied to residential and commercial land and buildings transactions where a chargeable interest is acquired.

Social security:

For the first time social security will be fully devolved, which the Fiscal Commission noted would be “an increase both in the size of the Scottish Budget and in the fiscal risks to which it is exposed”.

Council budgets:

Scottish local authorities have the ability to raise council tax by as much as 4.79%. This is not to be confused with other tax revenues in Scotland and does not contribute to the Scottish Government’s revenue powers.

By law, the council tax rate has to be set by local authorities before April 1.

Council revenue budgets, however, are dependent on the core settlement passed on by the Scottish Government. Last year this stood at just over £10.8 billion for all 32 authorities.

Picture: PA. The Scottish Government has the power to introduce air departure tax.