Headline tax announcements from the Scottish and Welsh Budgets

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On 19 December, Deputy First Minister Shona Robison presented the Scottish Budget for 2024 to 2025 to the Scottish Parliament. On the same day, Finance Minister, Rebecca Evans issued various statements alongside the Welsh Draft Budget for 2024-25.

Income tax

In Scotland, it was announced that a sixth income tax band (the 45% advanced rate) would be introduced from 6 April 2024 for income between £75,000 and £125,140. In addition, the top rate will increase by one percentage point to 48%.

The proposed income tax rates and bands for Scotland are:

	2023/24		2024/25
	Band	Rate	Band	Rate
Starter	£12,571*- £14,732	19%	£12,571* - £14,876	19%
Basic	£14,733*- £25,688	20%	£14,877 - £26,561	20%
Intermediate	£25,689 - £43,662	21%	£25,562 - £43,662	21%
Higher	£43,663 - £125,140**	42%	£43,663 - £75,000	42%
Advanced	N/A	N/A	£75,001 - £125,140**	45%
Top	Above £125,140	47%	Above £125,140	48%

*Assumes individuals are in receipt of the standard personal allowance.

**Those earning more than £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000.

In Wales, it is proposed that the income tax rates for 2024/25 will remain equal to income tax rates in England and Northern Ireland.

Land and buildings transaction tax (LBTT) in Scotland and land transaction tax (LTT) in Wales

No changes are proposed to LBTT rates and bands. However, following a consultation, to which ICAEW responded, the Scottish government will introduce legislation to the Scottish Parliament to provide for various amendments to the additional dwelling supplement (ADS). This includes:

extending the timelines for the ADS;
addressing concerns about certain scenarios involving joint buyers; and
extending the scope of residential LBTT relief for local authorities.

While the Welsh government does not propose any immediate changes to LTT, it did launch two consultations.

The first consultation concerns extending the three-year refund and exception periods where the sale of a former main residence was:

not possible because of emergency restrictions; and/or
impeded due to issues related to fire safety defects.

The second consultation concerns the introduction of an LTT relief for qualifying transactions of land within a designated Welsh special tax site (ie, a Welsh freeport or investment zone).

Scottish landfill tax (SLfT) and landfill disposals tax

Both governments announced inflationary increases in tax rates that are in line with UK landfill tax. The policy of ensuring rates are aligned is intended to reduce the risk of waste moving across borders.

Other points

The Welsh government plans to introduce legislation for a visitor levy into the Senedd by Autumn 2024;
The Scottish government remains committed to introducing an air departure tax;
If the Aggregates Tax and Devolved Taxes Administration (Scotland) Bill is approved by the Scottish Parliament, they intend to introduce a Scottish aggregates tax from 1 April 2026;
The Scottish government is seeking the timely transfer of powers to introduce a devolved building safety levy; and
The Scottish government is exploring whether a cruise ship levy could be included in the Visitor Levy (Scotland) Bill.

Further reading:

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