Government Expenditure & Revenue Scotland 2013-14

Government Expenditure and Revenue Scotland (GERS) is a National Statistics publication. It estimates the contribution of revenue raised in Scotland toward the goods and services provided for the benefit of Scotland. The estimates in this publication are consistent with the UK Public Sector Finances published in January 2015.


This annex outlines the methodologies used to estimate public sector revenue in Scotland. As the issue of North Sea revenue has been discussed extensively in Chapter 4, this annex focuses on all other elements of public sector revenue.

In contrast to public sector expenditure, there is no one generic approach to estimating public sector revenue in Scotland; instead each revenue stream is estimated using a separate methodology. This annex discusses these techniques. It should be noted that, as the underlying datasets used in GERS have been subject to revision and update, estimates may differ from previous editions of GERS even if the methodology has remained unchanged. Revisions to the estimates of Scottish public sector revenues from the previous edition of GERS are discussed in Annex C.


As highlighted in Chapter 3, the vast majority of public sector revenue raised in Scotland is collected at the UK level by HMRC.

In some cases, revenue figures can be obtained for Scotland directly. Examples include local government revenue and particular elements of public corporation revenue. Such revenues are the exception and separate identification of most other revenue streams for Scotland is not possible. GERS therefore uses a number of different methodologies to apportion revenues to Scotland. In doing so, there are often theoretical and practical challenges in determining an appropriate share to allocate to Scotland. In certain cases, a variety of alternative methodologies could be applied each leading to different estimates. A comparison of the apportionment methodologies used in this publication to HMRC's estimates of the breakdown of taxes collected in Scotland is provided in Box 3.1.

Obtaining an estimate of public sector revenue in Scotland is a two-stage process.

In the first stage, the UK outturn figure for each element of revenue is obtained from ONS Public Sector Finances Statistical Bulletin. In the second stage, Scotland's share of the UK figure is estimated according to a specific apportionment methodology. The methodology used differs for each element of revenue. The detailed revenue methodology paper on the GERS website contains a discussion of the apportionment methodology used for each revenue stream.[31]

UK Revenue Figures

The basis for estimating public sector revenue for Scotland is National Statistics outturn figures for UK fiscal revenue taken from ONS Public Sector Finances Statistical Bulletin. The detailed components, revenue by revenue, are taken from an ONS database (PSAT2) which is produced on a quarterly basis. The fiscal balance calculations in GERS are constrained to the UK Public Sector Finances Statistical Bulletin published in January 2015. An accounting adjustment is applied to both the expenditure and revenue totals so that both sides of the fiscal balance calculations are presented on a consistent basis. The revenue accounting adjustment is very small and has been included in 'other taxes, royalties and adjustments'.

These data are presented on an accruals basis and separately identify revenue attributed to central government, local government and public corporations. The international standards for National Accounts and Government Finance Statistics use the accruals basis rather than a cash approach. This is because accruals accounting reflects a more accurate picture of when revenue is due and spending occurs. In contrast, the alternative cash measure is more volatile as it, for example, records when bills are settled rather than when the expenditure occurs.

Summary of Apportionment Methodologies

Table A.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 Finances Statistical Bulletin estimates of UK revenue for some taxes have also been revised since the last edition of GERS. 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. This means that there have been small changes in the share of some UK taxes apportioned to Scotland since GERS 2012-13. Information on the scale of revisions is provided in Annex C.

More detailed information on the methodologies used and the changes introduced can be found in the Revenue Methodology paper on the GERS website.

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


Apportionment Methodology



Income tax

Scottish share of UK income tax liabilities applied to income tax gross of tax credits. Negative expenditure on tax credits estimated using Scot/UK share of overall spend on tax credits (negative tax plus benefits)

Survey of Personal Income (SPI): HMRC and Scottish Government analysis

Data on overall spend on tax credits: HMRC


Corporation tax (excl. North Sea)

Scotland's share of profits (less holding gains) of UK corporations

Regional Accounts: ONS


Capital gains tax

Actual outturns for Scotland



Other taxes on income and wealth

Various (see web annex)

Various (see web annex)


National insurance contributions

Estimates of employer, employee, class 2 and class 3 NIC revenue in UK and Scotland

Supplied directly by HMRC



Household VAT: Scotland's share of household expenditure

Business and construction VAT: Scotland's share of UK less extra-regio GVA

LG refunds: Scotland's share of UK LG current expenditure on goods and services

CG Refunds - MoD: Scotland/UK populations

- NHS: Scotland/UK TES for Health

- Other Gov depts: Scotland/UK total TES (Excluding NHS/MoD)

Living Costs and Food Survey: ONS

ONS Regional Accounts

Country and Regional Analysis, HM Treasury


Fuel duties

Scotland's share of road traffic fuel consumption

Fuel consumption statistics: DECC


Stamp duties

Land and property stamp duty: Actual outturns for Scotland

Stocks and shares: - Scotland/UK ratio of adults owning shares

Land and property stamp duty: HMRC

Stocks and shares: Family Resources Survey (DWP)


Tobacco duties

Spend on tobacco in Scotland/UK

Living Costs and Food Survey: ONS


Alcohol duties

Consumption of alcohol in Scotland/UK

Family Food Survey, DEFRA


Betting and gaming duties

Spend on betting and gaming in Scotland/UK

Living Costs and Food Survey: ONS


Air passenger duty

Scotland's share of passengers by air passenger duty band

Civil Aviation Authority and HMRC


Insurance premium tax

Spend on insurance Scotland/UK

Living Costs and Food Survey: ONS


Landfill tax

Scotland's share of UK tonnage of waste sent to landfill

Scottish Environment Protection Agency, Environment Agency, Dept. of Environment in Northern Ireland


Climate change levy

Electricity: Scotland's share of UK electricity consumption by commercial and industrial users

Gas: Scotland's share of UK gas sales to commercial and industrial users

Solid and other fuels: Scotland's share of UK (less extra-regio) GVA

Electricity: DECC


Solid and other fuels: Regional Accounts: ONS


Aggregates levy

Scotland's share of UK's aggregate production

United Kingdom Minerals Yearbook 2012: British Geological Survey


Inheritance tax

Actual outturns for Scotland



Vehicle excise duty

Scotland's share of total value of UK vehicle licences issued (less refunds)



Non-domestic rates

Actual Data

Scottish Local Government Finance Statistics


Council tax

Actual Data

Scottish Local Government Finance Statistics


Other taxes, royalties and adjustments

Various (see web annex)

Various (see web annex)


Interest and dividends

For Public Corporation (PC) receipts: Scotland's share of public sector UK GVA

Regional Accounts: ONS


For LG and CG receipts: Scotland/UK population


Gross operating surplus

CG: Scottish/UK share of central government NMCC

LG: Scottish/UK share of local government NMCC

Public corporations - individual data for Scottish PCs - data for UK-wide PCs based on relevant industry GVA - and actual data for Local Authority housing rentals

CG: ONS Regional Accounts

LG: ONS Regional Accounts

PC: Supplied by Public Sector Finance team: ONS, and Regional Accounts: ONS


Rent and other current transfers (excluding oil royalties and licence fees)

Various (see web annex)

Various (see web annex)


North Sea revenue

See Chapter 4

See Chapter 4


Box A.1: Challenges of measuring sub-UK VAT receipts

Estimates of VAT raised in Scotland published in GERS and by HMRC are primarily based on household expenditure, estimated using the Living Cost and Food Survey (LCFS). This is the source used to assign estimated household VAT receipts, which account for about 70% of total receipts.

The sample of the LCFS in Scotland is currently around 500 households, out of a UK total of around 5,600. The relatively small sample size reflects the fact that the survey is highly resource intensive, as it involves staff visiting households to collect data face to face over a number of visits.

The table below compares the standard error of the survey estimates for Scotland and the UK, and shows the implied margin of error in the current estimates of VAT.

UK and Scotland standard errors from the LCFS

Standard error

Total VAT

95% range
(+/- £m)





Scotland - current sample, 1 year




Scotland - current sample, 3 year pooled




GERS and HMRC use 3-year pooled sample to estimate sub-UK payments of VAT.

Issues with the current approach

Timeliness and responsiveness

The current survey results for Scotland are based on three year averages, to increase the sample size. This reduces the responsiveness of the estimates to changes in economic activity during a particular time period.

In addition, there is a lag in data becoming available. For example, 2013 data was published in December 2014, 11 months after the end of the year. Sub-UK data are currently not available in quarterly releases of LCFS data.

Tourism spend

The survey is based on UK household's expenditure. However, around 2.5% of UK household final consumption expenditure comes from non-resident households, i.e. tourists. This expenditure is not captured within the Living Cost and Food Survey. As such, the effect of large events held in Scotland which might be expected to increase Scottish VAT receipts, such as the Commonwealth Games, would not be captured in the current estimate.

Similarly, there is an issue around domestic tourism, and how much VAT is generated in Scotland as a result of tourists from the rest of the UK visiting Scotland and vice versa. The LCFS current assumes that all domestic spending occurs in the region where the respondent is resident.


Email: Mairi Spowage

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