Scottish Budget approved - after furore!
The Scottish Budget for 2023/24 went ahead on 15 December but only after a furore in the Scottish Parliament about leaked documents relating to the proposed tax and other announcements. But were these good or bad news if you’re a Scottish taxpayer?
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Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
-
Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
-
Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
Scotland determines its income tax rates for earned income (but not investment income) separately from the rest of the UK. The latest Budget announcements signalled an increase in the existing differential in rates by adding an extra percentage point to the income tax rate for many taxpayers. In addition, the earnings band at which the top rate of tax applies was reduced to mirror the change in the rest of the UK. The table below shows the current year’s income tax rates and those proposed for 2023/24.
|
|
2022/23 |
2023/24 |
||
|
Rates |
Earnings |
Tax rate |
Earnings |
Tax rate |
|
Tax -free allowance |
£12,570 |
- |
£12,570 |
- |
|
Starter |
£12,571 - £14,732 |
19% |
£12,571- £14,732 |
19% |
|
Basic |
£14,733 - £25,688 |
20% |
£14,733 - £25,688 |
20% |
|
Intermediate |
£25,689 - £43,662 |
21% |
£25,689 - £43,662 |
21% |
|
Higher |
£43,663 - £150,000 |
41% |
£43,663 - £125,140 |
42% |
|
Top |
Above £150,000 |
46% |
Above £125,140 |
47% |
Higher income tax rates weren’t the only bad news. Anyone buying a second or subsequent dwelling will have to pay more land and buildings transaction tax (LBTT). The additional rate, i.e. that paid on top of standard LBTT was hiked from 4% to 6% with effect for purchases completed after 15 December 2022.
The Scottish government’s summary of tax and other changes is available here.





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