Fiscal framework outturn report: 2023

4. Fully Devolved Taxes

41. This section focuses on the operation of the two fully devolved taxes (LBTT and SLfT). It sets out provisional outturn for 2022-23, forecasts for 2023-24 onwards along with the provisional reconciliations required for the 2024-25 Budget. Though this report uses provisional 2022-23 outturn revenue for the fully devolved taxes, the final revenue data will be published as part of Revenue Scotland’s Annual Report and Accounts. HMRC outturn data for SDLT, which is used to calculate the final BGAs, is considered final.

42. Revenue Scotland manages and collects LBTT and SLfT and these revenue streams feed in to the Scottish Budget as they are collected. This means reconciliations for revenue are not necessary for these taxes. The Scottish Government manages any variance between forecast and actual revenues as part of its in-year budget management process.

43. However, the BGAs for these taxes do undergo reconciliations and are reconciled in two stages. The first stage is an in-year reconciliation, which normally takes place within the same financial year, on the basis of updated OBR forecasts produced for the UK autumn fiscal event. Outturn data from HMRC becomes available in the autumn roughly midway through the following financial year. Using these outturn figures, a final reconciliation is applied to the Block Grant in the financial year some two years after the original BGA was applied. As these figures are not yet available, this document makes reference to “provisional final” figures.

Land and Buildings Transaction Tax

44. Table 5 shows the provisional net effect on Budget for LBTT for 2022-23, and compares outturn to forecasts.

*2022-23 LBTT Provisional revenue outturn excludes penalties and accounting adjustments applied by Revenue Scotland

45. Table 5 shows that the difference between the BGA used to underpin the Scottish Budget 2022-23 (-663.6) and the provisional outturn BGA (-697.1) is negative £33.5 million. As shown in Table 6, £53.0 million was deducted as an in-year reconciliation in 2022-23 and a further provisional final reconciliation of positive £19.5 million is required. The net effect of the in-year reconciliation and the final reconciliation equates to the negative £33.5 million referenced above.

46. Table 7 compares the LBTT forecasts used to set the Scottish Budget 2023-24 with the latest forecasts of revenue and BGA for 2023-24. There have been no updated OBR forecasts since the UK Spring Statement in March 2023 nor any further SFC forecasts since May 2023 and therefore the latest forecast net effect on Budget, though up-to-date in forecast terms, is still indicative as the year is still in progress.

47. The change in the forecasts for the BGA in Table 7 reflect the difference between the BGA used in the Budget Act 2023 and the forecast of the BGA provided at the UK Spring Statement 2023. The actual in-year reconciliation will be based on updated BGAs forecasts provided alongside the next set of OBR forecasts which will follow later this year.

Scottish Landfill Tax

48. Table 8 shows the provisional net effect on the Scottish Budget for (SLfT for 2022-23, and compares outturn to forecasts.

*2022-23 SLfT Provisional revenue outturn excludes penalties and accounting adjustments applied by Revenue Scotland

49. Table 8 shows that the difference between the BGA used to underpin the Scottish Budget 2022-23 (-82.3m) and the provisional outturn BGA (-95.3m) is negative £13.0 million. As shown in Table 9, £20.9 million was deducted as an in-year reconciliation in 2021-22 and a further provisional final reconciliation of positive £7.8 million is required. The net effect of the in-year reconciliation and the final reconciliation equates to the negative £13 million referenced above.

50. Table 10 compares the forecasts used to set the Scottish Budget 2023-24 with the latest forecasts of revenue and BGA for 2023-24 SLfT. There have been no updated OBR forecasts since the UK Spring Statement in March 2023 nor any further SFC forecasts since May 2023 and therefore the latest forecast net effect on Budget, though up-to-date, is indicative as the year is still in progress.

51. As for LBTT, the change in the forecasts for the BGA for SLfT reflect the difference between the BGA used in the Budget Act 2023, and the forecast of the BGA provided at the UK Spring Statement in March 2023. The actual in-year reconciliation will be based on updated BGAs forecasts provided alongside the next set of OBR forecasts later this year.