Breaking New Ground? Developing a Scottish tax to replace the UK Aggregates Levy Consultation Analysis Report

Report on the responses to the Scottish Government consultation regarding the structure and operation of a Scottish Aggregates Tax

1. Executive Summary


The Scotland Act 2016 provided the Scottish Parliament with the power to legislate for a devolved replacement for the UK Aggregates Levy (UKAL). This levy, which came into effect in April 2002, was introduced to ensure that the environmental impacts of aggregates extraction were more fully reflected in prices. It generally applies to the commercial exploitation of primary aggregates (i.e., crushed rock, gravel and sand) used in a range of contexts, including housebuilding, infrastructure, landscaping, and environmental protection.

A UK Government review of UKAL concluded that the tax continues to play a role in achieving the UK Government’s wider environmental and mineral planning objectives, including to encourage the more efficient extraction and use of all aggregates.

Publication of this document coincides with introduction of the Aggregates Tax and Devolved Taxes Administration (Scotland) Bill (“the Bill”) to the Scottish Parliament. The Bill provides for the key aspects of the devolved tax, to be known as the “Scottish Aggregates Tax” (SAT). It also includes a small number of administrative measures of relevance to all fully devolved taxes, which are not considered in this document.

This document includes an analysis of responses to a Scottish Government consultation on the aggregates tax elements of the Bill. It also summarises the issues discussed at meetings of an advisory group convened in 2023. Where relevant, commentary on decisions taken by the Scottish Government for the Bill, following consultation and engagement, is provided.

Consultation and Engagement

In September 2022, the Scottish Government published a consultation seeking views on how a devolved aggregates tax, replacing UKAL, should be structured and operate. This public consultation - Breaking New Ground? Developing a Scottish tax to replace the UK Aggregates Levy - ran to late December 2022. A list of consultation respondents is provided at Annex B.

An advisory group was convened in March 2023 to support further and more detailed consideration of several policy issues. Details of the group’s membership and a link to the note of each meeting is provided at Annex A. To date the group has met on five occasions. The Scottish Government intends to continue to convene meetings of the group, together with Revenue Scotland, to support the implementation of SAT.

Summary of Views

During the consultation period and throughout the advisory group meetings, the Scottish Government heard views from a variety of individuals and organisations, including those involved in: aggregates production and usage; construction and infrastructure; waste and resource management; environmental interests; and tax, accountancy and legal representative organisations.

The key points that emerged from the initial consultation were:

  • Strong support amongst many respondents, particularly those representing industry interests, for the tax to align closely with UKAL and retain current definitions, exemptions and reliefs.
  • An alternative view from some respondents that the Scottish Government should introduce a distinctive tax with a broader scope, or could express the same scope more clearly in legislation. Alternative approaches suggested by respondents included to define the scope of the tax with reference to mineral type, construction activity or by availability of alternative products. However, specific and detailed proposals were not put forward.
  • Broad agreement that the tax has the potential to support circular economy goals, as part of a wider package of measures to encourage the increased availability of high-quality alternatives to primary aggregate.
  • A view that the introduction of a devolved tax creates an opportunity to address concerns about untaxed primary aggregate production, including through the development of a Scottish Aggregates Tax register.
  • Recognition of the complexities associated with creating two tax jurisdictions where there was previously one, including the treatment of cross-border movements of aggregate and the importance of avoiding double taxation.
  • The importance of continuing dialogue with key stakeholders on tax policy development, in line with commitments set out in our Framework for Tax.

Next Steps

The material and views gathered through the consultation activities have informed the provisions in The Aggregates Tax and Devolved Taxes Administration (Scotland) Bill.

The Bill will be considered by the Scottish Parliament in line with its established process for examining draft legislation, more details of which can be found on the Scottish Parliament website.

If the Bill secures Parliamentary approval, secondary legislation and preparatory work by Revenue Scotland will also be required before SAT can be formally introduced. This is in keeping with the approach taken with the other fully devolved taxes, Scottish Landfill Tax and Land and Buildings Transaction Tax.



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