Chapter 4: Devolved Taxes and Expenditure
Devolved and Reserved Revenue in Scotland 2016-17
Devolved and Reserved Expenditure in Scotland 2016-17
Following the implementation of the Scotland Act 2012 and Scotland Act 2016, the powers of the Scottish Parliament over taxation and expenditure in Scotland are changing. This chapter sets out the amount of public sector revenue and expenditure currently devolved and how this will change with the implementation of the Scotland Act 2016.
The table below sets out revenue raised in Scotland from taxes currently devolved to the Scottish Parliament. Devolved tax revenues increased from £5.2 billion in 2015-16 to approximately £10 billion in 2016-17, largely reflecting the devolution of the Scottish Rate of Income Tax in 2016-17.
Table 4.1: Currently devolved taxes
|Land and buildings transaction tax (devolved from 2015-16)||-||-||-||425||466|
|Scottish landfill tax (devolved from 2015-16)||-||-||-||147||149|
|Scottish Rate of Income Tax Liabilities (devolved from 2016-17) 1||-||-||-||-||4,600|
|Total devolved taxes||4,285||4,331||4,506||5,198||10,029|
1 This table shows Scottish Rate of Income Tax liabilities rather than receipts. They are therefore calculated on a different basis to the estimates of total Scottish income tax receipts in Table 1.1.
Further devolution of taxes is due to continue in the next few years, following the Scotland Act 2016. As these taxes are not yet devolved, the table below shows the estimated historical revenues from these taxes
Table 4.2: Revenue devolved under Scotland Act 2016
|Non-savings and non-dividend income tax liabilities (devolved from 2017-18)||10,489||10,881||11,004||11,160||11,313|
|Air passenger duty (devolved from 2018-19)||213||225||243||247||264|
|Aggregates levy (date of devolution to be decided)||43||44||55||53||59|
Note: this table shows Scottish non-savings and non-dividends income tax liabilities rather than receipts. They are therefore calculated on a different basis to the estimates of total Scottish income tax receipts in Table 1.1.
As well as devolving tax powers to the Scottish Government, the Scotland Act 2016 allows for the first 10p of the standard rate of VAT receipts and the first 2.5p of the reduced rate of VAT receipts in Scotland to be assigned to the Scottish Government, from 2019-20.
Table 4.3 shows the VAT that would have been assigned to Scotland under this approach.
Table 4.3: VAT Assignment: Scotland 2012-13 to 2016-17
|VAT assignment (from 2019-20)||4,166||4,538||4,663||4,890||5,097|
Note: Assigned VAT receipts are 50% of total receipts in all years.
Further information on the planned devolution of taxes to the Scottish Government is available in the fiscal framework agreement between the Scottish and UK Governments.  The net impact on Scottish Government funding will depend in part on how the block grant received by the Scottish Government is adjusted to reflect the devolution of new revenue streams. This adjustment will be based in part on the relative growth in tax per head for each devolved tax in Scotland and the rest of the UK. Table 4.4 below shows tax per head for Scotland and the rest of the UK for each of the relevant taxes. Whilst there are differences in growth in individual taxes between Scotland and the rest of the UK, over the five years to 2016-17, total devolved tax revenue per head in both Scotland and the rest of the UK have grown by 11%.
Table 4.4: Devolved revenue per head: Scotland and rest of UK
|£ per person|
|Scotland||Rest of UK|
Notes: Income tax refers to non-savings non-dividend income tax liabilities
APD: air passenger duty
LBTT: Land and Buildings Transaction Tax for Scotland, compared to LBTT and stamp duties on property for the UK
AL: aggregates levy
Devolved Social Security
The table below shows the expenditure in Scotland from social security benefits devolved to the Scottish Parliament prior to implementation of Scotland Act 2016.
Table 4.5: Social security devolved prior to Scotland Act 2016
|Council Tax Reduction 1||379||360||344||332||327|
|Scottish Welfare Fund 2||29||29||36||33||35|
|Discretionary Housing Payments 3||-||32||35||37||36|
1 Figures for 2013-14 show council tax benefit administered by the Department for Work and Pensions
2 Figures for 2012-13 are for Community Care Grants and Crisis Loans components of the Social Fund, which the Scottish Welfare Fund Replaced
3 Discretionary housing payments in this table only includes spending by the Scottish Government and excludes Department for Work and Pensions spending
The table below shows the latest available figures for social security benefits which are due to be devolved to the Scottish Government under the Scotland Act 2016.
Table 4.6: Devolved social security under Scotland Act 2016
|Disability Living Allowance||1,450||1,473||1,473||1,399||1,208|
|Winter Fuel Payment||187||186||184||181||180|
|Personal Independence Payment||-||20||164||318||547|
|Industrial Injuries Disablement Benefit||89||88||89||87||87|
|Severe Disablement Allowance||97||91||77||51||26|
|Discretionary Housing Payments 1||4||18||15||13||15|
|Cold Weather Payment||8||1||7||3||1|
|Sure Start Maternity Grant||3||3||3||3||2|
|Total expenditure on social security to be devolved||2,500||2,547||2,704||2,767||2,790|
1 Discretionary Housing Payments above only includes spending by the Department for Work and Pensions, and excludes spending by the Scottish Government
The fiscal framework agreement discussed above also covers the devolution of social security expenditure to the Scottish Government. The Scotland Act 2016 sets out that the final impact on the Scottish Government budget of devolution of these benefits will be determined through an adjustment to the Scottish block grant. As with devolved revenue, the adjustment made to the Scottish Government's budget to reflect this additional spending responsibility will depend in part on the relative growth in expenditure per head for each newly devolved benefit in Scotland and the rest of GB.
Table 4.7 below shows expenditure per head for each of the relevant benefits for Scotland and the rest of Great Britain. For the majority of social security, expenditure per head is higher in Scotland than the rest of Great Britain, although overall the rate of growth in expenditure per head has been faster in the rest of Great Britain since 2012-13.
Table 4.7: Devolved social security expenditure per head: Scotland and rest of GB
|£ per person|
|Scotland||Rest of GB|
|Disability living allowance||273||276||275||260||224||212||216||215||204||177|
|Winter fuel payment||35||35||34||34||33||35||34||34||33||32|
|Personal Independence Payments||0||4||31||59||101||0||2||24||46||79|
|Industrial Injuries disability benefit||17||17||17||16||16||14||14||14||14||13|
|Severe disablement allowance||18||17||14||9||5||14||14||11||7||4|
|Discretionary housing payments||1||3||3||2||3||1||3||3||3||3|
|Cold weather payment||2||0||1||1||0||2||0||0||0||0|
|Funeral expenses payments||1||1||1||1||1||1||1||1||1||1|
|Sure Start maternity grant||1||1||1||1||0||1||1||1||0||0|
Note: An error was identified in the Personal Independence Payments figures in this table, which was corrected on 1st September 2017.
No other figures or tables in the publication are affected by this change.
Summary of current and proposed devolved powers
The table below shows estimates of devolved receipts and expenditure before and after the implementation of the Scotland Act 2016.
Table 4.8: Fiscal powers before and after Scotland Act 2016, 2016-17 (£ million)
|Before Scotland Act 2016||After Scotland Act 2016|
|Non Saving Non Dividend Income Tax Liabilities (devolved from 2016-17)||4,600||11,313|
|Stamp Duties (Land and Buildings) (devolved from 2015-16)||466||466|
|Air Passenger Duty (devolved from 2018-19)||264|
|Landfill Tax (devolved from 2015-16)||149||149|
|Aggregates Levy (date to be decided)||59|
|Total devolved taxes||10,029||17,065|
|Devolved taxes as % of non-North Sea Scottish revenue||17%||30%|
|as % of revenue incl geographical share of North Sea revenue 1||17%||29%|
|Assigned VAT 2 (assigned from 2019-20)||5,097|
|Total devolved and assigned taxes||10,029||22,162|
|Devolved and assigned taxes as % of non-North Sea Scottish revenue||17%||38%|
|as % of taxes incl geographical share of North Sea revenue 1||17%||38%|
|Devolved expenditure including housing benefit 3 ( HB)||42,103||44,893|
|Devolved taxes as % of estimated devolved expenditure incl HB||24%||38%|
|Devolved and Assigned taxes as % of estimated devolved expenditure incl HB||24%||49%|
1 Figures for the shares of devolved taxes as a share of total taxes including a population share of North Sea revenue are the same as the share when excluding North Sea taxes.
2 Assigned VAT is shown on a gross basis, consistent with the National Accounts presentation. If net VAT were to be used, devolved expenditure would also need to be adjusted, as set out in Table A.9. In this case, devolved revenue as a share of estimated devolved expenditure would be 39% excluding housing benefit and 38% including housing benefit. Other Scotland Bill 2015-16 percentages are unchanged.
3 In GERS and the CRA, housing benefit is included in Scottish local government spending, as they make the payments to recipients, although it is set centrally and funded by the Department for Work and Pensions. Depending on definitions adopted, it could either be excluded or included in devolved expenditure.
Email: Sandy Stewart, firstname.lastname@example.org
Phone: 0300 244 4000 – Central Enquiry Unit
The Scottish Government
St Andrew's House