2021 Scottish Budget

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10 December 2021

2021 Scottish Budget

Despite the perceived lack of pomp and publicity, the 2021 Scottish Budget took place on 9 December 2021. SNP public finance minister Kate Forbes put forward the plans for the coming year, which still need to be approved by Scottish Government and then obtain Royal Assent, before they can come into effect.

This may not be a straight forward process, as the SNP is a minority party, so needs their proposals to be accepted by another party, which can often mean a trade-off to get to an agreeable position. For the last few years, this has been achieved with the Green Party, and the minister indicated that the 2021 Budget had been drawn up with co-operation from the Scottish Greens, so this situation looks likely to continue. Assuming all goes well, any changes are planned to come in from 6 April 2022.

So, what does the 2021 Budget mean for those living in Scotland? As with all government announcements, ‘the devil is always in the detail’ although there a number of notable proposals put forward. Here’s our top six hot spots:

Income tax bands to change
Scottish Child Payments are to double
LBTT is to remain unchanged
A reduction in business rates
Council tax will no longer be frozen
Public sector pay increases

Top of our list is the change to the income tax rate bands for the 2022-23 tax year. While the rates remain unchanged, the revised rate bands can be seen below:

	2021-2022 tax year		2022 – 2023 tax year
Tax band	Income	Tax rate	Income	Tax rate
Personal allowance	£0-£12,570	0%	£0-£12,570	0%
Starter rate	£12,571-£14,667	19%	£12,571 -£14,732	19%
Basic rate	£14,668 – £25,296	20%	£14,733 –£25,688	20%
Intermediate rate	£25,297 - £43,662	21%	£25,689 - £43,662	21%
Higher rate	£43,663 – £150,000	41%	£43,663 £150,000	41%
Top rate	More than £150,000	46%	More than £150,000	46%

What does this mean if you are subject to income tax in Scotland? As always there will be winners and losers, but the finance minister has stated that ‘the majority of taxpayers will continue to pay less tax in Scotland than if they lived elsewhere in the UK’, and that overall only 24% of the working population will be any worse off. It remains to be seen how this statement will chime with her proposals to provide public sector pay rises - by freezing the upper rate band thresholds, there may be an increased risk for those getting a pay rise to be pushed into a higher rate of tax.

If you would like to discuss your tax affairs and how the 2021 Scottish Budget could impact on them, please get in touch.