2. Tax – Overview of revenues, BGA and net budget position
2.1 This section provides an overview of the latest information (outturn or forecast) available regarding revenues and BGAs for income tax and the fully devolved taxes – Land and Building Transaction Tax (LBTT) and the Scottish Landfill Tax (SLfT).
2.2 Table 1 includes outturn data for Scottish income tax and fully devolved taxes for 2017-18, and for 2018-19 for fully devolved taxes. It also shows the most recent forecasts and the net effect on the Budget of the differences between BGAs and revenues.
Table 1: Latest Data on Tax Revenues and Block Grant Adjustments, 2017-18 To 2024-25
|Net effect on Budget||-97†||-179||-5||-48||6||74||180||N/A|
|Net effect on Budget||-27†||7†||81||88||80||73||54||N/A|
|Net effect on Budget||35†||37†||17||1||-80||-71||-57||N/A|
|Net effect on Budget||-89†||-133||93||41||7||77||176||N/A|
Note 1: The BGAs shown in this and subsequent tables are calculated using the Indexed Per Capita (IPC) indexation method. This method in practice determines the BGAs applied to the budget.
Figures in this and subsequent tables may not sum due to rounding.
Key: † indicates outturn data
2.3 Revenue forecasts in this table are taken from the latest version of the Scottish Fiscal Commission's (SFC) Scotland's Economic and Fiscal Forecasts, published on 30 May. BGAs are based on forecasts of equivalent UK Government tax revenue prepared by the Office for Budget Responsibility (OBR). Revenue outturn is provided for Income Tax by HMRC, and for LBTT and SLfT by Revenue Scotland. This report uses provisional 2018-19 outturn revenue data for the fully devolved taxes. The final revenue data will be published as part of Revenue Scotland's Annual Reports and Accounts in October 2019.
2.4 The forecasts for income tax revenues and BGAs for 2018-19 and 2019-20 above do not have any immediate impact on the Scottish Budget, as they do not represent outturn data that will be used as the basis for reconciliations. The forecasts from 2020-21 provide an indication of the level of revenues that the SFC anticipates, but these figures will not be used to set the 2020-21 Budget in December 2019, as that will make use of the next set of forecasts that the SFC produces in December.
Taxes yet to be introduced
2.5 Some tax and social security powers devolved in the Scotland Act 2016 are yet to be implemented. In terms of taxes, these are assigned VAT, Air Passenger Duty and the Aggregates Levy.
Assigned VAT - The Fiscal Framework agreed that VAT assignment will be implemented following agreement between the two governments on a suitable assignment methodology. A one-year transitional period began in April 2019, during which the assigned VAT will be forecast and calculated, but with no impact on the Scottish Government's Budget. Discussions between the two governments continue over implementation in April 2020.
Air Passenger Duty - Air Departure Tax (ADT), replacing Air Passenger Duty (APD), is fully devolved to Scotland. Its introduction has been deferred until a resolution is found for flights departing from the Highlands and Islands with the UK Government continuing to apply APD in Scotland in the interim.
Aggregates Levy - Ongoing legal issues in relation to the UK Levy which had delayed the implementation of this power were recently resolved. The timetable for devolving the tax is dependent on the outcomes of the UK Government review of the UK Levy.
2.6 Information relating to these taxes will be included in future Outturn Reports, following their implementation.
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