A few weeks on from Jeremy Hunt’s Autumn Statement, Deputy First Minister John Swinney has announced the Scottish budget.
Swinney remarked that his announcement was guided by the principle that the “tax burden should be proportionate to the ability to pay.” This is so that everyone can continue to enjoy the “benefits of strong public services.”
With a cost-of-living crisis still the hot topic throughout the UK, Swinney said that this announcement takes place in the most “turbulent economic and financial context most people can remember.” Swinney echoed Hunt’s earlier Autumn Statement by claiming:
“The war in Ukraine has brought energy and price inflation right to the heart of our economy and public services – compounded by some of the significant strategic mistakes that have been made in the United Kingdom around Brexit and the mini-budget in early September.”
It is again these ideas of global crises caused by the war in Ukraine and high rates of inflation that have formed the backdrop to the Scottish budget for 2023-24. None of this has been helped by the UK government’s mini-budget, according to Swinney.
Lastly, Swinney mentioned that this budget cannot be understood without acknowledging that no carryover from the previous budget will be possible. This is in contrast to a £450m carryover from the 2021-22 budget into the 2022-23 budget.
How will individuals in Scotland be affected?
- Highest tax band has been reduced from £150,000 to £125,140.
- Rate of tax paid by people in the Starter, Basic and Intermediate bands has been frozen.
- In the Higher tax band, taxation rates have been increased by 1 percentage point to 42%.
- In the Top tax band, taxation rates have been increased by 1 percentage point to 47%.
- All social security benefits under the control of the Scottish government will increase by 10.1%.
All of this is designed to create over £550m in increased revenue in 2023-24 which will be invested in public services.
What’s more, individuals who run their own company can take their remuneration in the form of a low salary within the Basic or Intermediate tax bands. The balance can then taken as dividends which are not affected by Scottish taxes.
What are the key takeaways as far as businesses in Scotland are concerned?
- No public sector pay policy has been addressed in this budget.
- Non-domestic rates poundage frozen at 2022-23 levels. A freeze has been applied to the basic property rate.
- Small business bonus scheme has been reformed and extended to take around 100,000 properties out of rates altogether.
- New prescribed plant and machinery exemptions for on-site renewable energy generation and storage to quicken the process of Scotland becoming Net Zero.
As always, as more details are released, we will update this article so that you don’t miss a beat. In the meantime, please reach out to your local AIMS Accountant here who can clarify anything mentioned in this article and help you save money.