Fiscal framework: factsheet

Detailed information about the fiscal framework agreed between the Scottish and UK Governments.


In the Fiscal Framework, the UK and Scottish Governments agreed that the BGAs for each tax will be indexed using two different indices: the Comparable Model (CM) and the Indexed Per Capita (IPC) model.

As a result of the 2023 review, BGAs will now be indexed using the IPC model on a permanent basis going forward. Under IPC, the Scottish block grant will reduce in line with the growth in equivalent tax revenue and increase in line with social security expenditure per head in the rest of the UK.

This means that if devolved Scottish tax revenues and social security expenditures per head grow at the same rate as in the rest of the UK, the Scottish budget will be no better or worse off than before devolution. This is because the amount being taken out through the block grant adjustment is the same as the amount coming in through devolved revenues.

If per capita receipts grow faster in Scotland than the rest of the UK, then the Scottish budget is better off relative to pre-devolution and vice versa. This could reflect differences in economic performance in Scotland and the rest of the UK, as well as different choices about the future path of tax policy in Scotland.

Contact

Email: ceu@gov.scot

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