Fiscal framework outturn report: 2025

4. Fully Devolved Taxes

31. This section focuses on the operation of the two fully devolved taxes (LBTT and SLfT). It sets out provisional revenue outturn for 2024-25, forecasts for 2025-26 onwards, along with the final reconciliations required for the 2026-27 Budget. This report uses provisional 2024-25 revenue outturn for the fully devolved taxes. The final revenue outturn data will be published as part of Revenue Scotland’s Annual Report and Accounts. HMRC outturn data for Stamp Duty Land Tax and Landfill Tax, which are used to calculate the BGAs, are final.

32. Revenue Scotland manages and collects LBTT and SLfT and these revenue streams feed into 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.

33. 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 two years after the original BGA was applied.

Land and Buildings Transaction Tax

34. Table 4 shows the provisional net effect on the Scottish Budget for LBTT for 2024-25, and compares outturn to forecasts.

*2024-25 LBTT Provisional revenue outturn excludes penalties and accounting adjustments applied by Revenue Scotland

35. Table 4 shows that the difference between the BGA used to underpin the Scottish Budget 2024-25 (-£521.2 million) and the provisional outturn BGA (-£625.0 million) is negative £103.8 million. As shown in Table 5, £53.0 million was deducted as an in-year reconciliation in 2024-25 and a further final outturn reconciliation of negative £50.9 million is required. The net effect of the in-year reconciliation and the final outturn reconciliation equates to the negative £103.8 million referenced above.

36. In the Scottish Budget 2024-25, the Scottish Government announced that the rates and bands for residential and non-residential LBTT, the first-time buyer relief and the Additional Dwelling Supplement (ADS) would all remain at their 2023-24 levels. Following prior consultation on draft legislation, there was also a commitment to bring forward various legislative amendments to the ADS. The changes, which were subsequently introduced with effect from 1 April 2024, included an extension to the timelines for ADS repayment in certain circumstances, measures to address concerns about certain scenarios involving joint buyers and an extension of the residential LBTT relief for local authorities.

37. Subsequently at Scottish Budget 2025-26 the rate of the ADS was increased to 8%, with effect from 5 December 2024. Transitional provisions meant that this increase did not apply where legal missives had been signed on or before 4 December 2024.

38. Table 4 shows the LBTT forecast error of £168.7 million for 2024-25. The main source of error in the forecast was in relation to property prices and transactions, especially in the residential sector which accounts for the majority of LBTT. The SFC expected residential prices and transactions to fall in 2024-25 in a continuation of their trend from 2023-24 before returning to growth in 2025-26. Instead, they both returned to strong growth earlier than this in 2024-25. For example, the number of residential and non-residential property transactions subject to LBTT actually rose by 9% and 3% respectively between 2023-24 and 2024-25.

39. Table 6 compares the LBTT forecasts used to set the Scottish Budget 2025-26 with the latest forecasts of revenue and BGA for 2025-26. The change in the forecasts for the BGA in Table 6 reflect the difference between the BGA used in the Budget Act 2025 and the forecast of the BGA provided at the UK Spring Statement 2025. 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

40. Table 7 shows the net effect on the Scottish Budget for Scottish Landfill Tax (SLfT) for 2024-25, and compares outturn to forecasts.

*2024-25 SLfT Provisional revenue outturn excludes penalties and accounting adjustments applied by Revenue Scotland

41. Table 7 shows that the difference between the BGA used to underpin the Scottish Budget 2024-25 (-£83.5 million) and the final outturn BGA (-£73.4 million) is positive £10.1 million. As shown in Table 8, £8.6 million was added as an in-year reconciliation in 2024-25 and a further final outturn reconciliation of positive £1.5 million is required. The net effect of the in-year reconciliation and the final reconciliation equates to the positive £10.1 million referenced above.

42. Both the standard and lower rates of SLfT were increased in Scottish Budget 2024-25, maintaining consistency with rates in other parts of the UK. SLfT revenue has fallen by 62% since 2015-16, falling by 18% in 2024-25 alone. This is primarily due to the amount of standard rate waste being sent to landfill decreasing. This is in line with the tax’s policy intent and reflects in particular the increasing availability and use of alternative waste treatments (e.g. incineration) as local authorities prepare for the legislative ban on the landfilling of biodegradable municipal waste from 31 December 2025.

43. Table 9 compares the forecasts used to set the Scottish Budget 2025-26 with the latest forecasts of revenue and BGA for 2025-26 SLfT. The change in the forecasts for the BGA for SLfT reflect the difference between the BGA used in the Budget Act 2025, and the forecast of the BGA provided at the UK Spring Statement in March 2025. The actual in-year reconciliation will be based on updated BGAs forecasts provided alongside the next set of OBR forecasts later this year.