Government Expenditure and Revenue Scotland (GERS): detailed methodology 2024-25

Table 1 provides a summary of the apportionment methodologies used for each element of revenue and highlights whether or not the methodology has changed since the previous edition of GERS. In some instances ONS’s Public Sector Finance estimates of UK revenue for some taxes have also been revised since the last edition of GERS, and these changes will affect the estimates of Scottish tax revenue. In addition, there have been revisions to some of the data sources used to apportion tax revenues to Scotland.

Table 1: Apportionment Methodologies and Sources for Public Sector Revenue in Scotland (Excluding North Sea Revenue)

Background

Income tax is the single largest source of public sector revenue in both Scotland and the UK. A taxpayer's income is assessed for income tax according to a prescribed order:

1. non-savings and non-dividend (NSND) income
2. savings income
3. dividend income

NSND income tax covers around 90% of income tax, with a small amount (around 1%) of income tax being paid on savings, and the remainder of income tax paid on dividend income.

Since 2017-18, a different tax regime applies to non-savings income, income tax in Scotland. This is referred to as Scottish Income Tax. Although the personal allowance continues to be set for the whole of the UK, the subsequent rates and bands for NSND income tax are now set by the Scottish Government. Savings and dividend income continues to be taxed at the same rates across the UK. Information on the UK personal allowance and the rates and bands for reserved income tax is available at https://www.gov.uk/personal-tax/income-tax

The table below show the income tax rates and bands for NSND income tax in Scotland for 2024-25. Further information on Scottish income tax is available at https://www.gov.scot/policies/taxes/income-tax/

Income tax rates for Scotland in 2024-25

Consistent with the presentation of income tax used by the OBR and ONS, the income tax line in GERS also includes a number of smaller taxes. These are:

• Company income tax;
• Household charitable donations via gift aid;
• Non-profit institutions serving households tax credits.

Methodology

The approach for estimating Scottish revenue for each line is summarized in the table below. UK figures for income tax and associated revenue are taken from ONS’ database underlying the Public Sector Finances.

The main apportionment for income tax is HMRC’s Scottish Income Tax statistics. This is administrative outturn data on NSND income tax for all Scottish income tax payers.

Data are taken from the latest outturn statistics for Scottish Income Tax, published by HMRC. The publication provides a breakdown of Scottish Income Tax by self-assessment and by pay as you earn (PAYE) for the years 2016-17 to 2023-24. It also provides indicative information on PAYE income tax for 2024-25 through the real time information system.

Scottish Income Tax Outturn Statistics: 2023 to 2024 - GOV.UK

Income tax is split into income tax from PAYE and self-assessment. This reflects the different way these taxes are recorded in the Public Sector Finances. For PAYE, the Public Sector Finances shows income tax against the year that the income was earned. For example, PAYE income tax for 2024-25 shows tax paid on income earned in 2024-25. For self-assessment, the Public Sector Finances show the income tax at the time it was paid. For example, self-assessment income tax for 2024-25 shows the tax which was paid in 2024-25, which primarily relates to income earned during the 2023-24 tax year.

GERS therefore apportions PAYE income tax and self-assessment income tax separately. For PAYE, the Scottish share is taken as the share of NSND PAYE Scottish Income Tax liabilities for that year. For 2024-25, the growth rate in indicative income tax from the real time information system is used to determine the Scottish share.

For self-assessment, the Scottish share is taken as the share of NSND self-assessment Scottish Income Tax for the previous year. That is, the share of self-assessment liabilities in 2023-24 is applied to UK self-assessment income tax receipts for 2024-25. This methodology assumes that self-assessed income tax received in 2024-25 relates to income tax liabilities from 2023-24. This is a simplification, as many self-assessed income tax payers will make pre-payments of their income tax, known as payments on accounts. This methodology will continue to be reviewed in conjunction with users.

This methodology is applied from 2016-17 onwards, which is the period that information is available collected using new Scottish taxpayer identifiers on income tax returns. For previous years, the Scottish share of income tax liabilities from the Survey of Personal Incomes (SPI) continues to be used. GERS uses the SPI data excluding taxpayers with no postcode information for this calculation.

Differences from Previous Year’s Methodology

There are no differences from the previous year’s methodology.

Background

National insurance contributions (NICs) are a tax on earnings. Their payment is designed to allow the payee to build an entitlement to certain social security benefits, including the state pension. There are a number of different rates, thresholds and classes for national insurance. The main rate, known as the class 1 rate, was unchanged between 2011-12 and most of 2023-24 at 12% for employees and 13.8% on employers. In January 2024 the main rate for employees was cut to 10%, and in April 2024 it was cut further to 8%. There have also been changes to thresholds during this period.

For details of current thresholds and rates please see https://www.gov.uk/national-insurance-rates-letters/contribution-rates

Methodology

The UK figure for total NICs from ONS’ database underlying the Public Sector Finances is apportioned using Scotland’s share of UK class 1 NICs separately for employees and employers, using data from HMRC’s Real Time Information system provided by HMRC.

Differences from Previous Year’s Methodology

There are no differences from the previous year’s methodology.

Background

Value added tax (VAT) is charged on the sale of most goods and services in the UK. Depending upon the product, VAT is charged at three different rates; during the period of the report these were: standard rate, reduced rate (5%) and zero rate. Certain services are also ‘exempt’ from VAT.

The standard rate of VAT was temporarily reduced from 17.5% to 15% on 1 December 2008, and it returned to 17.5% on 1 January 2010. The standard rate of VAT increased from 17.5% to 20% on 4 January 2011. For further details please see VAT rates - GOV.UK (www.gov.uk)

Methodology

The UK figure for total VAT revenues is taken from ONS’ database underlying the Public Sector Finances. VAT revenue is then disaggregated into VAT paid by households, businesses, government, and the housing sector.

Scotland’s share of UK VAT revenues is taken from HMRC’s Scottish VAT assignment statistics. This shows the results of the VAT assignment model jointly developed by the Scottish and UK Governments. The approach used in the VAT assignment model is very similar to that previously used in GERS. VAT is split between a number of sectors, such as households, business and government, and Scotland’s share of these sectors is estimated individually to derive an estimate of overall VAT. The VAT assignment methodology extends the approach previously used in GERS to explicitly consider VAT from tourism, and incorporates adjustments for elements such as the Retail Export Scheme and traders below the VAT schedule. Information on the results are available at Scottish VAT Assignment – Experimental Statistics - GOV.UK (www.gov.uk)

The latest estimates from the VAT assignment model are for 2022. This shows the Scottish share continuing to recover from a low figure in 2020 due to a fall in domestic tourism during the pandemic.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

Corporation tax is a tax on a company’s taxable income or profits. Different rates apply depending upon the amount of profit raised. There are a number of special accounting rules for particular expenditures, such as capital investment and research and development, which qualify for tax allowances and reliefs. Details of the current tax allowances and tax rates are available at Business tax: Corporation Tax - detailed information - GOV.UK (www.gov.uk)

In the November 2022 Autumn Statement, the UK Government announced an additional Electricity Generator Levy, which came into effect on 1 January 2023 and is included within corporation tax revenue in GERS. The levy is intended as a temporary 45% charge on exceptional receipts generated from the production of wholesale electricity. Exceptional receipts will be defined as amounts from wholesale electricity sold at an average price in excess of a benchmark price of £75/MWh over an accounting period. This benchmark price will be adjusted in line with the Consumer Price Index from April 2024.

There are different rates and rules governing corporation tax of North Sea output. These are discussed in more detail later in this note.

Methodology

In general, GERS apportions a share of UK revenues from corporation taxes based on the economic activity undertaken in Scotland and not the location of companies’ headquarters. Public corporations’ and North Sea corporation tax revenues are excluded from the analysis and are apportioned to Scotland separately.

Calculating Scottish corporation tax revenues is a two stage process. Firstly the UK figure for total corporation tax is taken from ONS’ database underlying the Public Sector Finances. An adjustment is then made to remove corporation tax payments from the North Sea sector.

The Scottish share of UK corporation tax (excluding North Sea) is taken from the ONS Country and Regional Public Sector Finances publication Country and regional public sector finances - Office for National Statistics (ons.gov.uk)

Differences from Previous Year’s Methodology

The figure for financial year 2024 was provided directly to the Scottish Government by ONS, as there has been no ONS Country and Regional Public Sector Finances publication in 2025.

Background

Fuel duty, formally known as hydrocarbon oil duty, is an excise duty levied on the sale of oils (including road fuels). The rate of duty levied varies between fuel types. Information on current duty rates is available from Business tax: Fuel Duty - detailed information - GOV.UK (www.gov.uk)

Methodology

The UK figure for total fuel duties is taken from ONS’ database underlying the Public Sector Finances. This is split into duty paid on petrol and duty paid on diesel using data from HMRC’s Hydrocarbon Oils Duties bulletin. Hydrocarbon Oils Bulletin - GOV.UK

As with other excise duties, the estimation of revenues raised from fuel duty in Scotland is based on the premise that the burden of duty is borne by the final consumer.

Fuel duty revenues are apportioned to Scotland by estimating Scotland’s share of UK fuel consumption. UK road traffic fuel consumption and a regional breakdown, based on weighted traffic flows on a sample of roads across the UK, are published by the Department for Business, Energy, and Industrial Strategy (BEIS). Using this information Scotland’s share of UK petrol and diesel consumption is derived. These estimates are then applied to the figure for UK revenue from each source to estimate Scotland’s share of total fuel duty.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

In general, non-domestic rates, or business rates, are levied on occupiers of non-residential properties such as shops, offices, warehouses and factories. In Scotland, rates are calculated by multiplying a property’s rateable value, set by the local assessor, by the poundage rate, set by the Scottish Government. The basic poundage rate in Scotland in 2024-25 was 49.8 pence; i.e., a property with a rateable value of £10,000 would pay non-domestic rates of £4,980.

In addition, businesses with a rateable value of more than £51,000 and less than £100,000 in 2024-25 pay an intermediate supplement of 1.3 pence, and those with a rateable value of more than £100,000 pay a higher supplement of 2.6 pence. Between 2012-13 and 2014-15 large retail properties which are licenced to sell alcohol for consumption off premises and with a rateable value of more than £300,000 pay a Public Health Supplement of 13 pence.

Methodology

For earlier years the figure for Scotland is taken directly from Scottish Local Government Financial Statistics. Non-domestic rates income statistics - gov.scot

The latest year’s figure uses the published mid-year estimate. Non-domestic rates income statistics - gov.scot

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

Full council tax is levied on occupiers of a house which is their sole or main residence. There are a range of exemptions and reliefs from council tax, including a 25% reduction for single occupancy households, and between 10% and 50% reduction for dwellings which are not the main residence (i.e. second homes). For further details about exemptions and reliefs from council tax please see: https://www.gov.uk/council-tax

Methodology

Council tax receipts for Scotland are taken directly from the Scottish Government. Council Tax Collection Statistics, 2024-25 - gov.scot

Since the collection year for the latest rate is provisional and is typically an underestimate due to late payments, the accrued estimate for the latest year has been taken as the net amount billed multiplied by the historic collection rate across all years.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

Some public sector bodies receive refunds of VAT that they have paid in respect of contracted out services for non-business purposes, including the free-to-enter public museums. As this VAT is recovered, it is netted out in departmental budgets. In the National Accounts, as these VAT payments by general government bodies form part of the prices paid as a final consumer, they are added back into government expenditure to show gross expenditure. A symmetric adjustment is made to revenues to show VAT receipts gross of these refunds.

Methodology

VAT refunds from local government and central government are apportioned differently. Local government VAT refunds are apportioned on the basis of Scotland’s share of UK local government final consumption expenditure.

Central government VAT refunds:

• to the Ministry of Defence are assigned on the basis of Scotland’s share of the UK population;
• to NHS are assigned on the basis of Scotland’s share of UK Total Expenditure on Services on health;
• to other government departments – on basis of Scotland’s share of total UK Total Expenditure on Services (less Ministry of Defence and NHS).

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

Capital gains tax (CGT) is a tax on capital gains from the buying and selling of assets. The capital gain is broadly the difference between the disposal proceeds and the cost of acquiring an asset. Individuals have an annual amount on which CGT is not liable and as with other forms of personal taxation various reliefs and exemptions are available.

Prior to June 2010 capital gains tax was charged at a flat rate of 10%. In June 2010, it has been charged at a basic rate of 18% and a top rate of 28% for higher-rate taxpayers. This was then changed again in 2016-17, and the tax rate now depends on whether the asset is a residential property or not.

• For higher rate tax payers:
  • 24% on residential property;
  •  other assets. - 18% April to October 2024, 24% October 2024 onwards.
• For basic rate tax payers:
  • residential property - 18%
  • other assets - 10% April to October 2024, 18% October 2024 onwards.

Details of the current tax allowances and tax rates are available at Capital Gains Tax: what you pay it on, rates and allowances: Overview - GOV.UK (www.gov.uk)

Methodology

The UK figure for total CGT is taken from ONS’ database underlying the Public Sector Finances.

 ONS produces estimates of the amount of revenue raised from capital gains tax in Scotland for each financial year. These annual figures are converted to quarterly estimates, and the proportion of the UK revenue raised in Scotland based on these figures is applied to the UK total. The latest estimates of Scottish revenues are for 2022-23.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

Inheritance tax is a tax on assets, exceeding a minimum threshold, transferred on or shortly before death. An individual’s estate on death for inheritance tax purposes is made up of a range of assets including those held directly in their name, their share of jointly owned assets and various other forms of asset. For further information regarding exemptions is available from Personal tax: Inheritance Tax - detailed information - GOV.UK (www.gov.uk)

 Methodology

The UK figure for total inheritance tax is taken from ONS’ database underlying the Public Sector Finances.

HMRC produces estimates on the amount of revenue raised from inheritance tax in Scotland. The proportion of the UK revenue raised in Scotland based on these figures is applied to the total UK figure obtained from the ONS’ database. The latest HMRC data are for 2021-22.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

Stamp duty is levied on conveyances and transfers of land and property and on share transactions. Since 1 April 2015, stamp duties on transfers of land and property in Scotland have ben devolved to the Scottish Parliament, and only stamp duty on share transactions remains reserved.

For details on the rates of UK duty, please see Completing a stock transfer form - GOV.UK (www.gov.uk)

Stamp duties in GERS also include the Annual Tax on Enveloped Dwellings, which was introduced in April 2013. This is a tax payable by companies that own residential property valued at over £2 million. Further information is available at Annual Tax on Enveloped Dwellings - GOV.UK (www.gov.uk)

Methodology

The UK figure for revenue from reserved taxes is taken from ONS’ database underlying the Public Sector Finances.

Separate methods are used for estimating Scotland’s share of UK revenue raised from (1)  stocks and shares stamp duties, and (2) the annual tax on enveloped dwellings.

1. Stocks and Shares Stamp Duty: The Scotland/UK ratio stamp duty on stocks and shares is taken from the ONS publication Country and Regional Public Sector finances.
2. Annual tax on enveloped dwellings: HMRC publishes estimates of receipts from this tax in Scotland, based upon the share of transactions of residential property valued above £1 million. This is used in place of administrative data in order to meet disclosure rules.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

Land and Buildings Transaction Tax replaced the UK Stamp Duty from 1 April 2015. It is a tax on purchases of commercial and residential land and buildings. The structure of the tax is designed so that the charge is proportionate to price of the property. From 1 April 2016, an additional supplement is applied to purchases of additional residential properties in Scotland, such as buy-to-let properties and second homes.

 For further details and rates see Land and Buildings Transaction Tax | Revenue Scotland

Methodology

Figures reflect outturn data from Revenue Scotland. For years prior to 2024-25, figures are consistent with Revenue Scotland’s latest Annual Report - Devolved Taxes Accounts. For 2024-25, figures are based on the in-year reported amounts.  There may be small differences due to timing adjustments.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

Environmental levies consist of Carbon Reduction Commitment and Renewables Obligation payments.

The Carbon Reduction Commitment is a mandatory scheme which aims to improve energy efficiency and cut emissions in large public and private sector energy users across the UK. Participants must monitor their energy supplies and purchase allowances to cover the associated CO2 emissions.

The Renewables Obligation places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. Operators require certificates for the energy they generate. Certificates can be traded between operators to ensure they have sufficient to meet their scheme targets. As the scheme is mandatory, payments associated with it are regarded as a tax, even when they are not made directly to the government. As such, revenue and expenditure associated with the scheme by energy operators are included as both an imputed tax and subsidy in the public sector finances. This does not affect the fiscal balances.

Methodology

Scotland is allocated a share of Carbon Reduction Commitment revenue in line with its share of UK electricity consumption by industry. This is taken from the BEIS Sub-national electricity consumption data. https://www.gov.uk/government/collections/sub-national-electricity-consumption-data

Figures for the Renewables Obligation are based on data on payments made by operators in Scotland, based on data provided directly by ONS.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

This revenue element includes all interest and dividend payments received by the public sector from the private sector and the rest of the world. Interest payments received by public sector bodies from other UK public sector bodies are not included.

Methodology

UK figures for interest and dividend revenue received by (a) public corporations, (b) local government and (c) central government and (d) public sector pensions, are obtained from ONS’ database underlying the Public Sector Finances. Following advice from the OBR, central government interest income is split into interest received from student loans and other interest income. Following the reclassification of housing associations into the public sector, public corporation interest income is split into housing association and non-housing association income.

UK central government student loans income is estimated for Scotland using actual Scottish receipts in the ONS PSAT2 database. Local government and other central government revenues from interest and dividends are apportioned to Scotland using Scotland’s share of UK population. Interest income relating to public sector pensions is apportioned using public sector GVA.

Income for Scottish housing associations is taken directly from the Scottish series for the UK Public Sector Finances. Interest income for other public corporations is apportioned using public sector GVA.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

Gross operating surplus (GOS) refers to the operating (or trading) surpluses (or losses) of central government, local government and public corporation trading activity. 

By definition, general government GOS is equal to general government non-market capital consumption. This is a measure of the amount of fixed capital resources used up in the production process (i.e. depreciation). Since this is a public sector receipt, that does not raise actual funds, it is balanced by an offsetting item within public expenditure. By definition, the adjustment item (NMCC) is added to public expenditure rather than subtracted on the revenue side.

For public corporations, the GOS figure includes the gross trading surplus, rental income, stock appreciation (or holding gains), and FISIM (Financial Intermediation Services Indirectly Measured).

Methodology

In calculating GOS for Scotland, separate figures are estimated for:

1. Central government
2. Local government
3. Public corporations

1. The UK revenue for central government GOS is taken from ONS’ database underlying the Public Sector Finances.

It is apportioned to Scotland according to Scotland’s share of UK NMCC for central government obtained from ONS Regional Accounts.

2. The UK revenue for local government GOS is taken from ONS’ database underlying the Public Sector Finances.

It is apportioned to Scotland according to Scotland’s share of UK NMCC for local government obtained from ONS Regional Accounts.

3. Scotland’s share of GOS for public corporations is taken from the ONS Country and Regional Public Sector Finances.

The approach taken to estimate the GOS for public corporations in Scotland is different. The GOS of public corporations comprises the following elements –

1. Gross trading surplus (from operating activities);
2. Gross trading surplus (from artistic originals);
3. Housing Revenue Account (HRA)
4. Rental Income (excluding HRA)
5. FISIM
6. Holding Gains

For elements 1 and 4, revenue from every public corporation was obtained. Public corporations were classified as ‘Scotland’, ‘Not Scotland’, or ‘UK’, depending on their area of coverage. For those classified as ‘Scotland’, all of the revenue (Gross Trading Surpluses, Rental and FISIM) was assigned to Scotland. Public corporations classified as ‘Not Scotland’ were excluded. For ‘UK’ public corporations, revenue was apportioned to Scotland on the basis of the relevant industry GVA share.

Gross trading surpluses relating to artistic originals in general arise from the BBC and Channel 4. Scotland is apportioned a population share of this revenue.

For the Housing Revenue Account, figures were obtained directly for local authority rents in Scotland from ONS.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.

Background

This revenue covers other non-tax revenue received by central government, local government and public corporation trading activity.  The largest component is local government rental income.

The UK figure for rents and other current transfers is taken from ONS’ database underlying the Public Sector Finances.

Rents and other current transfers for central government, local governments and public corporations are estimated separately.

Central government rents and other current transfers comprise the following elements:

1. Revenues for spectrum use in relation to licences for 3G mobile telephones
2. Rents on land
3. Water abstraction
4. Other spectrum revenues
5. Court fines
6. Other, e.g. speed camera fines, charitable contributions to NHS trusts

Local government other receipts comprise income of insurance and pension funds allocated to local authorities as beneficial owners.

Public corporation other receipts relate to the activities of the Export Credits Guarantee Department.

A number of revenue items are netted off in this line, as part of consolidating revenue across the public sector:

1. Business rates paid by local authorities in England
2. Corporation tax paid by public corporation

Methodology

The methodology for apportioning these revenues to Scotland is shown below.

Differences from Previous Year’s Methodology

There has been no change in methodology since the previous edition of GERS.