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Government Expenditure and Revenue Scotland 2020-21

Government Expenditure and Revenue Scotland (GERS) is a National Statistics publication. It estimates the revenue raised in Scotland and the goods and services provided for the benefit of Scotland.

This document is part of a collection


1 Public Sector Revenue

Total Public Sector Revenue: Scotland 2020-21
A chart showing total public sector revenue by tax for Scotland in 2020-21

Introduction

This chapter provides detailed estimates of Scottish public sector revenue.

The majority of public sector revenue payable by Scottish residents and enterprises is collected at the UK level. Generally it is not possible to identify separately the proportion of revenue receivable from Scotland. GERS therefore uses a number of different methodologies to apportion revenue to Scotland. These are discussed in the methodology paper on the GERS website.[7]

Following the implementation of the Scotland Act 2012 and Scotland Act 2016, an increasing amount of revenue is being devolved to the Scottish Parliament, and direct Scottish measures of these revenues are becoming available. To date, landfill tax, property transaction taxes, and non-savings non-dividend income tax have been devolved. Chapter 4 provides more information on current and future devolved taxes. Note that the income tax figures in this chapter cover all income tax, whilst those in Chapter 4 cover only non-savings and non-dividend income tax.

For taxes where there is no direct measure of Scottish revenue, GERS uses a set of data sources and methodologies developed over a number of years following consultation with, and feedback from, users. In some cases, a variety of methodologies could be applied, each leading to different estimates of public sector revenue in Scotland. Table A.5 in Annex A provides analysis of the confidence intervals around revenue estimates based on survey data.

GERS reports tax and non-tax revenue separately. Non-tax revenues are primarily non-cash items such as capital consumption, included for accounting purposes in gross operating surplus, and the operating surplus of public corporations such as Scottish Water. These are discussed in more detail below.

Estimated Revenue 2020-21

Table 1.1 reports estimated public sector revenue in Scotland and the preliminary outturn data for the UK in 2020-21. The contribution of each element of revenue to the Scottish total, and the proportion of UK revenue raised in Scotland, are also included in the table. The three largest taxes, income tax, national insurance contributions, and value added tax continue to account for around two thirds of total non-North Sea revenue, despite VAT falling during the pandemic. The support provided to the labour market during the pandemic has meant that income tax and national insurance contributions have been affected to a lesser degree, with income tax continuing to grow.

Overall, Scotland’s share of UK revenue in 2020-21 was 7.9%. This represents a fall from 8.0% in 2019-20, in part due to a weaker performance in income tax. This reflects the latest 2020-21 Pay As You Earn (PAYE) income tax data from HMRC’s Real Time Information system, and weaker self-assessment receipts received in 2020-21, although these relate to the previous tax year.

In order to report revenue on a National Accounts basis, an international reporting standard used by governments, a number of accounting adjustments are included in the total revenue estimate. These are primarily symmetric adjustments that also form part of expenditure, and therefore have little impact on the net fiscal balance.

Table 1.1:Revenue: Scotland and UK 2020-21
Scotland UK
£ million
Scotland as % of UK
£ million % of total non-North Sea taxes
Income tax 13,117 24.5% 198,131 6.6%
National insurance contributions 11,476 21.4% 144,217 8.0%
Value added tax 9,635 18.0% 118,075 8.2%
Corporation tax (excluding North Sea) 3,174 5.9% 50,915 6.2%
Fuel duties 1,708 3.2% 20,909 8.2%
Non-domestic rates 1,816 3.4% 21,161 8.6%
Council tax 2,600 4.9% 38,454 6.8%
VAT refunds 1,907 3.6% 20,191 9.4%
Capital gains tax 484 0.9% 10,611 4.6%
Inheritance tax 247 0.5% 5,350 4.6%
Reserved stamp duties 301 0.6% 14,636 2.1%
Scottish land & buildings transaction tax 515 1.0% 515 100.0%
Scottish landfill tax 106 0.2% 106 100.0%
Air passenger duty 34 0.1% 326 10.6%
Tobacco duties 1,333 2.5% 9,786 13.6%
Alcohol duties 1,231 2.3% 12,447 9.9%
Insurance premium tax 422 0.8% 6,381 6.6%
Vehicle excise duties 545 1.0% 6,964 7.8%
Environmental levies 747 1.4% 6,296 11.9%
Other taxes1 2,204 4.1% 26,140 8.4%
Total Non-North Sea taxes 53,603 100% 711,611 7.5%
North Sea taxes2
Population share 34 414 8.2%
Geographical share 550 414 132.8%
Other revenue
Interest and dividends 2,095 25,142 8.3%
Gross operating surplus 6,176 56,361 11.0%
Other receipts 414 3,272 12.6%
Total revenue
Excluding North Sea 62,287 796,386 7.8%
Including population share of the North Sea 62,321 796,800 7.8%
Including illustrative geographical share of the North Sea 62,837 796,800 7.9%
of which: revenue accounting adjustments 7,140 72,387 9.9%

1 A description of the other taxes line is provided in the detailed methodology paper on the GERS website.

2 As the receipts for UK Petroleum Revenue Tax are negative, the Scottish share of North Sea revenue appears unusually high in 2020-21. This is discussed in more detail in Chapter 2.

Unlike the expenditure accounting adjustments, which are shown in a separate expenditure line, the revenue accounting adjustments are included within different revenue lines, as is set out in Table A.9 in Annex A. In order to aid transparency, a revenue accounting adjustments line is shown at the bottom of Table 1.1 and 1.4. This is a sub-total of revenue, and is not additional to the revenue totals reported in these tables.

Total public sector non-North Sea revenue in Scotland was estimated to be £62.3 billion in 2020-21, a fall of 4.6%. This is equivalent to 7.8% of UK total non-North Sea revenue which is 0.3 percentage points lower than Scotland’s share of the UK population.[8] In general, Scotland’s share of most large revenues is close to either its population or GDP share. However, there are some exceptions to this, discussed below.

Revenues where Scotland’s share of UK revenue is relatively low are those associated with property or assets, such as capital gains tax (4.6%), and inheritance tax (4.6%). This reflects the fact that properties and assets in Scotland tend to have lower values than the UK average.[9] Scotland’s share of income tax (6.6%) is also relatively low. In part, this reflects the shifting of income tax onto higher earners, through the introduction of the additional rate of income tax and increases in the personal allowance. Scotland has relatively fewer additional rate tax payers, with only around 4% of the UK total.

Revenues where Scotland has a relatively large share include non-domestic rates (8.6%), and gross operating surplus (GOS), which includes the surpluses of public corporations. Scotland is estimated to generate approximately 11.0% of UK public sector GOS, higher than Scotland’s population share. Scotland’s GOS includes Scottish Water, which is a large contributor to UK public corporations’ GOS. The equivalent water companies in England and Wales are outside the public sector and hence do not contribute to UK GOS.

Scotland tends to also have relatively high shares of duties associated with tobacco and alcohol. This reflects the greater incidence of smoking in Scotland,[10] and also the fact that Scotland has higher consumption of spirits than the rest of the UK.[11] Scotland also has a relatively high share of ‘other receipts’, as for the UK this line nets out refunds of non-domestic rates paid by local authorities. Due to the different structure of reporting non-domestic rates in Scotland, these refunds are not separated out for Scotland.

Table 1.2 below provides a time series of Scotland’s share of the largest UK revenues. In general, Scotland’s share of UK revenue has been broadly stable since 2016-17, at around 7.8%.

Table 1.2: Non-North Sea Revenue: Scotland as share of UK
per cent of UK revenue
2016-17 2017-18 2018-19 2019-20 2020-21
Income Tax 6.7% 6.6% 6.6% 6.8% 6.6%
Corporation tax (excl North Sea) 6.6% 6.2% 6.2% 6.2% 6.2%
National insurance contributions 8.0% 8.0% 8.0% 7.9% 8.0%
Value added tax 7.9% 8.4% 8.4% 8.2% 8.2%
Council tax and non-domestic rates 8.0% 8.0% 7.8% 7.7% 7.4%
All other revenue 8.8% 8.7% 9.0% 9.0% 9.1%
Total current non-North Sea revenue 7.8% 7.8% 7.9% 7.9% 7.8%

Estimated Revenue: Scotland and the UK, 2016-17 to 2020-21

Table 1.4 shows estimated revenue in Scotland and the UK between 2016-17 and 2020-21. Non-North Sea revenue in Scotland is estimated to have grown by 5.0% between 2016-17 and 2020-21 in nominal terms, similar to the UK as a whole (4.8%). This weak growth reflects the fall in revenue in 2020-21 as a result of the pandemic.

Table 1.3 shows estimates of revenue per person for Scotland and the UK between 2016-17 and 2020-21. Excluding North Sea revenue, revenue per person in Scotland is lower than in the UK by £477 in 2020-21. Including an illustrative geographical share of North Sea revenue the difference is £382.

Table 1.3: Revenue Per Person: Scotland and UK 2016-17 to 2020-21
£ per person
2016-17 2017-18 2018-19 2019-20 2020-21
Scotland
Excluding North Sea revenue 10,962 11,279 11,784 11,953 11,395
Including North Sea revenue (population share) 10,963 11,299 11,802 11,963 11,402
Including North Sea revenue (geographical share) 10,992 11,490 12,034 12,108 11,496
UK
Excluding North Sea revenue 11,557 11,823 12,254 12,388 11,872
Including North Sea revenue 11,557 11,842 12,272 12,398 11,878
Difference (Scotland minus UK)
Excluding North Sea revenue -595 -544 -470 -435 -477
Including North Sea revenue (population share) -595 -544 -470 -435 -477
Including North Sea revenue (geographical share) -566 -353 -238 -290 -382

Box 1.1: Comparison between GERS and ONS estimates

Any analysis of public sector receipts in Scotland relies on estimation, and as such alternative estimates are possible. As discussed in the Preface, GERS estimates revenue using a set of apportionment methodologies, refined over a number of years following consultation with, and feedback from, users.

The Office for National Statistics (ONS) now publishes public sector finances for the countries and regions of the UK. The latest estimates covering the period to 2019-20 were published on 21 May 2021.[12]

The table below compares the estimates in GERS with those published by ONS. There are some differences between the ONS and GERS numbers. For non-North Sea taxes, these primarily relate to VAT. The estimates of VAT in GERS are consistent with those published by HMRC for Scottish Assigned VAT, whilst the ONS use a methodology which produces results for all UK country and regions, which has a higher estimate for Scotland. The ONS, HMRC and the devolved administrations are working together to reconcile, and where possible align, methodologies for estimating tax receipts for the UK countries and regions

The differences in other non-North Sea receipts are primarily due to using different data sources for interest and dividends, where GERS uses specific data for interest income from Scottish student loans.

Estimates of Total Scottish Revenues 2016-17 to 2020-21
£ million
2016-17 2017-18 2018-19 2019-20 2020-21
Non-North Sea taxes
GERS 50,819 52,844 55,581 56,336 53,603
ONS 51,419 52,481 55,444 56,382 n/a

Difference

-600 363 137 -46 n/a

Other non-North Sea receipts

GERS

8,484 8,381 8,577 8,977 8,685

ONS

9,106 9,020 9,356 9,786 n/a

Difference

-622 -639 -779 -809 n/a

Geographical share of North Sea revenues

GERS

159 1,142 1,358 844 550

ONS

109 1,141 1,340 863 n/a

Difference

50 1 18 -19 n/a
Table 1.4: Revenue: Scotland and UK 2016-17 to 2020-21
£ million
Scotland UK
2016-17 2017-18 2018-19 2019-20 2020-21 2016-17 2017-18 2018-19 2019-20 2020-21
Income tax 11,808 11,970 12,768 13,069 13,117 177,247 180,593 192,366 193,430 198,131
National insurance contributions 10,014 10,470 10,939 11,502 11,476 125,852 131,627 137,534 144,708 144,217
Value added tax 9,655 10,609 11,177 10,956 9,635 122,035 126,374 133,589 133,852 118,075
Corporation tax (excluding North Sea) 3,526 3,336 3,430 3,099 3,174 53,184 53,978 55,065 49,708 50,915
Fuel duties 2,274 2,299 2,290 2,248 1,708 27,937 27,878 27,993 27,572 20,909
Non-domestic rates 2,731 2,762 2,847 2,761 1,816 29,418 30,444 31,531 31,744 21,161
Council tax 2,077 2,257 2,349 2,456 2,600 30,361 32,131 34,820 36,346 38,454
VAT refunds 1,587 1,572 1,666 1,794 1,907 17,448 17,272 18,214 18,879 20,191
Capital gains tax 363 311 444 448 484 8,380 7,793 9,190 9,826 10,611
Inheritance tax 288 281 252 238 247 4,897 5,277 5,450 5,150 5,350
UK stamp duties 336 297 293 296 301 15,762 17,212 16,699 16,972 14,636
Scottish land & buildings transaction tax 484 557 554 597 515 484 557 554 597 515
Scottish landfill tax 149 148 149 119 106 149 148 149 119 106
Air passenger duty 256 274 290 273 34 3,211 3,360 3,632 3,655 326
Tobacco duties 1,070 1,138 1,253 1,316 1,333 8,681 8,766 9,152 9,693 9,786
Alcohol duties 1,076 1,122 1,175 1,134 1,231 11,117 11,585 12,097 11,535 12,447
Insurance premium tax 315 389 417 429 422 4,907 5,898 6,306 6,480 6,381
Vehicle excise duties 468 498 520 548 545 5,997 6,378 6,667 7,000 6,964
Environmental levies 577 674 752 746 747 5,067 5,850 6,487 6,397 6,296
Other taxes 1,764 1,880 2,018 2,307 2,204 21,897 23,923 24,509 27,588 26,140
Total Non-North Sea taxes 50,819 52,844 55,581 56,336 53,603 674,031 697,044 732,004 741,251 711,611
North Sea taxes
Population share of North Sea revenue 3 106 98 53 34 36 1,297 1,196 643 414
Illustrative geographical share of North Sea revenue 159 1,142 1,358 844 550 36 1,297 1,196 643 414
Other receipts
Interest and dividends 2,019 2,022 2,106 2,204 2,095 23,018 23,810 25,040 26,687 25,142
Gross operating surplus 6,028 5,930 6,028 6,336 6,176 59,278 57,731 54,592 56,911 56,361
Other receipts 437 428 443 437 414 3,487 3,365 3,557 3,509 3,272
Total revenue (excl North Sea revenue) 59,303 61,225 64,158 65,312 62,287 759,814 781,950 815,193 828,358 796,386
Total revenue (incl pop share North Sea revenue) 59,306 61,331 64,256 65,365 62,321 759,850 783,247 816,389 829,001 796,800
Total revenue (incl geog share North Sea revenue) 59,461 62,367 65,516 66,157 62,837 759,850 783,247 816,389 829,001 796,800
Of which, revenue accounting adjustment 6,203 6,364 6,607 6,898 7,140 62,952 64,778 67,519 69,775 72,387

Contact

Email: Economic.Statistics@gov.scot

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