Business broadly welcomes Scottish Government budget of 'no surprises'

Business leaders welcomed the Scottish Government’s “no surprises” draft budget after tax bands and property taxes were left alone.

The basic and intermediate tax thresholds will rise with inflation but there are no changes to higher and top thresholds in plans announced by public finance minister Kate Forbes, standing in after the resignation of finance secretary Derek Mackay.


The Scottish Fiscal Commission forecast that annual income from taxation would rise from £15.2 billion to £19.1 billion by 2024-25, with income tax alone bringing in an extra £51 million.

Alexander Garden, chair of the Chartered Institute of Taxation’s Scottish Technical Committee, said: “The full picture remains unclear because we need to wait until the UK Budget on 11 March for confirmation of the impact of UK changes on Scottish taxpayers and the potential for further divergence.

“This includes the planned UK-wide increase to the level that people start paying National Insurance to £9,500 and – although it seems unlikely – the potential for further increases to the tax-free personal allowance.

“Scots who earn income from sources such as savings and dividends are not impacted by today’s announcements as these are reserved to Westminster. They will have to wait until the UK Budget to know what income tax they will pay in the coming year.”


Land and Buildings Transaction Tax for residential property goes uchanged.

David Melhuish, Scottish Property Federation director, said: “The decision to reduce business rates burdens for 9,500 ratepayers in Scotland is a welcome step towards meeting the Barclay Review’s recommendation on the large business supplement.

“However, a full realignment with England is needed to reduce the current disadvantage faced by some Scottish ratepayers.  

“The introduction of an additional tax rate on commercial property leases is also disappointing. This new charge will add further tax and complications to businesses for relatively little return to the Scottish Government.”

Councils and housing

Councils are to receive an extra £494 million funding for the year – a real-terms rise of 4.3%, according to the Scottish Government and which can be topped up by up to £135 million through a rise in council tax.

The budget for the Affordable Housing Supply Programme will increase to £843 million and spending to cut fuel poverty and improve energy efficiency will rise from £119.6 million to £137.1 million.

But Sally Thomas, chief executive of the Scottish Federation of Housing Associations (SFHA), said: “Overall, we are disappointed with today’s Draft Budget. The small increase in energy efficiency funding is only a fraction of what is needed – as part of the Existing Homes Alliance we had called for it to be doubled.

“We are pleased to see that the Scottish Government is sustaining funding for the final year of the Affordable Housing Supply Programme, which will be essential to meeting the 50,000 homes target as well as to provide a better platform to continue the programme after this parliament ends.”


Spending on rail services will rise from £989 million to £1.25 billion; motorways and trunk road spending falls from £833.1 million to £748.9 million; £49.6 million has been allocated to bail out Ferguson Marine which is building two overdue ferries for CalMac; and spending on digital connectivity will go up from £32.9 million to £63.4 million.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “The budget hits a delicate balance between the need to invest in a low carbon future and the sustainability of our rural communities and crumbling road network.

“Commitment to current plans of investment in A9 and the A96, as well as the commitment to regenerate the Clyde, are key asks from the business community and we are pleased these will continue to go ahead along with other key projects. Our members also welcome support for decarbonisation of transport in the Future Transport Fund and the Low Carbon transport loan fund.”

Economy, environment and education

The £150 million Building Scotland Fund and £220 million in direct investment will back the new Scottish National Investment Bank; cash for finance, the economy and fair work will increase from £5.33 billion to £6.27 billion.

Spending on education and skills will increase to £3.5 billion, £22.1 million of that in extra cash for colleges and universities.

There was also an increase from £426.6 million to £461.8 million for spending on the environment, climate change and land reform.

SCDI head of communications Fraser Grieve said: “With the UK Budget delayed until March, and in the context of Brexit, it’s welcome that there are no major surprises in this Scottish Budget.

“We support the steps that have been taken to support net zero, including the extra funding for infrastructure, a Heat Transition Deal, agriculture, and the Scottish National Investment Bank. Evidently this will need to be ramped-up following publication of a new Climate Change Plan.

“The forecasts from the Scottish Fiscal Commission published today show the need to continue to focus on increasing inclusive growth and productivity. We welcome the firm commitment of the Scottish Government to modernise key connectivity infrastructure for the north of Scotland.”

Claire Mack, chief executive of Scottish Renewables, said: “We welcome the announcement of £50 million to help local authorities invest in low-carbon heat networks, as well as the assurance that rates relief will be guaranteed for such schemes until 2032. This package of measures will plug vital funding gaps and help Scotland build on its lead in rolling out innovative low-carbon heat projects and give industry the certainty to invest and deliver on the enormous economic opportunity presented by the transition to low-carbon heat.

The Federation of Small Businesses’ (FSB) Scotland Policy Chair, Andrew McRae, said: “After this week’s parliamentary drama around Business Rates, there are some sensible moves on reliefs. It’s great news that the lifeline Small Business Bonus Scheme is safe, as are tax breaks for those who invest in their premises.

“Given the particular pressures facing the sector, it’s also good that relief for day nurseries has been confirmed for another year.

“We also welcome the intent to achieve a degree of tax stability and the prediction that income tax divergence with the rest of the UK is not predicted to increase, notwithstanding what happens in the UK Budget next month.”


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.