The higher and top rates of income tax will be increased and the top-rate threshold reduced, from April 2023. The land and buildings transaction tax additional dwelling supplement increases to 6% from 16 December 2022. John Swinney, Deputy First Minister, delivered the Scottish government’s 2023/24 Budget on 15 December 2022. Key tax announcements include the following:
On income tax rates and thresholds:
The higher and top rates of income tax will be increased by 1 percentage point to 42% and 47% respectively from 6 April 2023;
the starter (19%), basic (20%) and intermediate (21%) rates will be unchanged.
the top-rate threshold (above which the 47% rate will apply) will be reduced from £150,000 to £125,140 from 6 April 2023 (mirroring the position for the rest of the UK);
the starter, basic, intermediate and higher-rate thresholds will be frozen; and
the personal allowance is not devolved to the Scottish government, so will remain frozen at £12,570 until 2027/28, in line with the rest of the UK (unless the UK government decides otherwise).
Land and buildings transaction tax: The additional dwelling supplement (ADS) will increase from 4% to 6% from 16 December 2022, subject to exclusions for transactions straddling that date. The Land and Buildings Transaction Tax (additional amount: transactions relating to second homes etc) (Scotland) Amendment Order, SSI 2022/375 makes the necessary changes.
The Scottish government also intends to consult on draft legislation taking forward the conclusions from its previous consultation on the operation of the ADS.
Residential and non-residential rates will be unchanged and the increased nil-rate band for first-time buyers will continue to be available.
Scottish landfill tax: The standard rate will increase to £102.10 per tonne and the lower rate to £3.25 from 1 April 2023, in line with landfill tax and landfill disposals tax in the rest of the UK.
The credit rate for the Scottish Landfill Communities Fund for 2023/24 will remain at a maximum of 5.6% of an operator’s tax liability.
Writing in Tax Journal, Isobel D’Inverno and Alan Barr (Brodies) said the Scottish Budget made ‘some fairly radical departures from rUK tax policy. Until the leaks on Budget day itself, few would have predicted the 1p rise in the top two rates of Scottish income tax, although the replication (at least) of the reduction in the top rate threshold was a near-certainty. The 50% rise in the ADS rate was also a surprise; it will be interesting to see if this is a tax too far for at least some elements of the Scottish housing market.’
The higher and top rates of income tax will be increased and the top-rate threshold reduced, from April 2023. The land and buildings transaction tax additional dwelling supplement increases to 6% from 16 December 2022. John Swinney, Deputy First Minister, delivered the Scottish government’s 2023/24 Budget on 15 December 2022. Key tax announcements include the following:
On income tax rates and thresholds:
The higher and top rates of income tax will be increased by 1 percentage point to 42% and 47% respectively from 6 April 2023;
the starter (19%), basic (20%) and intermediate (21%) rates will be unchanged.
the top-rate threshold (above which the 47% rate will apply) will be reduced from £150,000 to £125,140 from 6 April 2023 (mirroring the position for the rest of the UK);
the starter, basic, intermediate and higher-rate thresholds will be frozen; and
the personal allowance is not devolved to the Scottish government, so will remain frozen at £12,570 until 2027/28, in line with the rest of the UK (unless the UK government decides otherwise).
Land and buildings transaction tax: The additional dwelling supplement (ADS) will increase from 4% to 6% from 16 December 2022, subject to exclusions for transactions straddling that date. The Land and Buildings Transaction Tax (additional amount: transactions relating to second homes etc) (Scotland) Amendment Order, SSI 2022/375 makes the necessary changes.
The Scottish government also intends to consult on draft legislation taking forward the conclusions from its previous consultation on the operation of the ADS.
Residential and non-residential rates will be unchanged and the increased nil-rate band for first-time buyers will continue to be available.
Scottish landfill tax: The standard rate will increase to £102.10 per tonne and the lower rate to £3.25 from 1 April 2023, in line with landfill tax and landfill disposals tax in the rest of the UK.
The credit rate for the Scottish Landfill Communities Fund for 2023/24 will remain at a maximum of 5.6% of an operator’s tax liability.
Writing in Tax Journal, Isobel D’Inverno and Alan Barr (Brodies) said the Scottish Budget made ‘some fairly radical departures from rUK tax policy. Until the leaks on Budget day itself, few would have predicted the 1p rise in the top two rates of Scottish income tax, although the replication (at least) of the reduction in the top rate threshold was a near-certainty. The 50% rise in the ADS rate was also a surprise; it will be interesting to see if this is a tax too far for at least some elements of the Scottish housing market.’
