Policy actions  1 of 3

Setting the Scottish Budget

Setting the Scottish Budget is a year-round process that begins in May each year. The normal milestones during the year are as follows:

Event Date expected
Medium Term Financial Strategy May 
Fiscal Framework Outturn Report September
Parliamentary subject committees submit spending proposals October
The UK Government publishes the UK Budget November
The Scottish Fiscal Commission publishes Scottish Income Tax Estimates December
The Budget Bill is introduced, and the draft spending and tax plans published in a supporting document December
The Budget’s tax and spending proposals are scrutinised by Parliament January
The Budget Bill is debated by Parliament January (stage 1) and February (stages 2 and 3) 
The Budget Bill receives Royal Assent and becomes the Budget Act April 
Autumn Budget revision September
Spring Budget revision February

In the winter of 2019 to 2020, the UK Budget was delayed from November 2019 to March 2020. As a consequence the Scottish Budget and the Scottish Fiscal Commission Income Tax Estimates were rescheduled to February 2020 along with Parliament’s scrutiny, and the Budget Bill was debated at Stage 1 in February 2020, with Stages 2 and 3 being in March 2020.

The Scottish Budget hasn't always been set like this. Read the history of the Scottish Budget further down the page.

Medium Term Financial Strategy

In May we publish the Medium Term Financial Strategy, which:

  • explains the Fiscal Framework and funding arrangements we now operate within
  • outlines our approach to financial management and fiscal rules
  • sets out a range of possible funding scenarios for the Scottish Budget over the next five years
  • details our key policy priorities and approach to supporting Scotland's economy

Fiscal Framework Outturn Report

In September we publish a Fiscal Framework Outturn Report, which covers the following elements of the fiscal framework:

  • reconciliation process
  • Scotland Reserve
  • borrowing powers
  • social security powers

The Budget Bill

Scottish Ministers must present Parliament with their spending proposals in the form of the Budget Bill supporting document within three weeks of the publication of the UK Budget. The Bill is introduced to Parliament a week later.

The Bill has three stages:

  • stage 1: debate in Parliament on the principles of the Bill
  • stage 2: the Bill is scrutinised by the Finance Committee
  • stage 3: the Bill is debated in Parliament, after which it receives Royal Assent and creates the Budget Act

The Budget Bill is subject to a separate process from other bills. One of the main differences is that only Scottish Ministers can bring forward amendments once the Bill has been introduced. Other proposed changes to the spending plans set out in the Budget Bill supporting document are likely to be debated, and voted on if necessary, in the Finance Committee session which typically takes place in February (stage 2).

Stage 3 must be completed within 70 days of the Bill being introduced. To ensure Royal Assent ahead of the start of the financial year, there is limited opportunity to delay the process.

The Budget Act

When the Budget Bill receives Royal Assent it becomes that year's Budget Act. This gives us the statutory authority to spend money as set out in the Budget.

Subject committees

From 2018, subject committees will have direct input to the budget process. Six weeks prior to the publication of the draft spending plans, the subject committees set out their views on the delivery and funding of existing policy priorities, any proposed changes, and how these should be funded. We respond to their suggestions in the Budget Bill supporting document, then debate any proposed amendments in Parliament prior to stage 1.

Scottish income tax

Our proposed rate of income tax for Scotland must be approved by Parliament separately to the rest of the Budget Bill, prior to stage 3.

Devolved taxes

The rates and bands for the Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax are published in the draft Budget Bill supporting document. Any changes to the devolved taxes must be pursued in parallel with the Budget Bill.

Budget revisions

The Budget Act is typically amended twice a year (although the regulations allow for a third revision if required) via a Scottish Statutory Instrument to better reflect the spending patterns emerging from the monthly monitoring of budgets.

These are known as the Autumn and Spring Budget Revisions and are laid around September and February, after which they are scrutinised by the Finance Committee.

However, it is not possible to change the Scottish Rate Resolution (the Scottish rate of income tax) once the final year to which it applies has begun (on 1 April).

History of the Scottish Budget

Originally, the Scottish Parliament's annual budget setting process started with a consultation period that began with the publication of the draft budget. This method was proposed by the Financial Issues Advisory Group (FIAG), which was established in 1998 by the then Secretary of State for Scotland. Back then, the Scottish Parliament had no powers over taxation so its budgeting activity focused almost entirely on expenditure.

The process has since been revised frequently, as the Parliament has gained experience and new fiscal powers. All revisions have been agreed with the Parliament's Finance and Constitution Committee.

Revised budget process

Scotland Acts 2012 and 2016 devolved new fiscal powers to the Scottish Parliament which the budget needed to take into account.

In 2017 an independent Budget Process Review Group was established to carry out a fundamental review of the budget process. The Budget Process Review Group's final report recommended some structural changes to the Budget process, as well as changing expectations placed on us, the Parliament and public bodies.

The recommendations were agreed in full by the Finance and Constitution Committee and the Cabinet Secretary for Finance and the Constitution, and formed the basis of the revised written agreement between the Committee and the Scottish Government which was subsequently approved by Parliament in May 2018.

The changes to the written agreement should lead to a broader budget process, in which subject committees have the flexibility to incorporate budget scrutiny into their work prior to the publication of firm and detailed spending proposals, with an emphasis on developing a deeper understanding of the impact of budgetary decisions over a number of years.