Publication - Statistics

Government Expenditure and Revenue Scotland (GERS) 2019-2020

Published: 26 Aug 2020

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.

Contents
Government Expenditure and Revenue Scotland (GERS) 2019-2020
Chapter 1: Public Sector Revenue

Chapter 1: Public Sector Revenue

Total Public Sector Revenue: Scotland 2019-20
A chart showing total public sector revenue by tax for Scotland in 2019-20

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.[10]

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.

2019-20 is the third year of the operation of the new, more extensive Scottish Income Tax powers, where the Scottish Government has the power to set the rates and bands for income tax for Scottish residents.[11] These figures are shown in Chapter 4, and show the amount of non-savings non-dividend (NSND) income tax paid on earnings in a given year. The income tax figures in this chapter cover all income tax, and are presented on a slightly different basis consistent with the UK Public Sector Finances, but are consistent with the HMRC figures.

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 2019-20

Table 1.1 reports estimated public sector revenue in Scotland and the preliminary outturn data for the UK in 2019-20. 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. Income tax, national insurance contributions, and value added tax account for around two thirds of total non-North Sea revenue. 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 2019-20
Scotland UK Scotland as % of UK
£ million % of total non-North Sea taxes £ million
Income tax 13,018 23.2% 195,330 6.7%
National insurance contributions 11,460 20.4% 144,245 7.9%
Value added tax 11,015 19.6% 133,819 8.2%
Corporation tax (excluding North Sea) 3,180 5.7% 50,992 6.2%
Fuel duties 2,392 4.3% 27,572 8.7%
Non-domestic rates 2,761 4.9% 32,142 8.6%
Council tax 2,487 4.4% 36,575 6.8%
VAT refunds 1,727 3.1% 18,820 9.2%
Capital gains tax 433 0.8% 9,978 4.3%
Inheritance tax 238 0.4% 5,153 4.6%
Reserved stamp duties 284 0.5% 16,871 1.7%
Scottish land & buildings transaction tax 598 1.1% 598 100.0%
Scottish landfill tax 119 0.2% 119 100.0%
Air passenger duty 273 0.5% 3,385 8.1%
Tobacco duties 1,240 2.2% 9,692 12.8%
Alcohol duties 1,149 2.0% 11,716 9.8%
Insurance premium tax 419 0.7% 6,393 6.6%
Vehicle excise duties 572 1.0% 7,000 8.2%
Environmental levies 748 1.3% 6,430 11.6%
Other taxes1 2,073 3.7% 24,225 8.6%
Total Non-North Sea taxes 56,185 100% 741,055 7.6%
North Sea taxes2
Population share 53 650 8.2%
Geographical share 724 650 111.4%
Other revenue
Interest and dividends 2,155 26,109 8.3%
Gross operating surplus 6,294 53,835 11.7%
Other receipts 520 4,397 11.8%
Total revenue
Excluding North Sea 65,155 825,396 7.9%
Including population share of the North Sea 65,208 826,046 7.9%
Including illustrative geographical share of the North Sea 65,878 826,046 8.0%
of which: revenue accounting adjustments 6,545 66,835 9.8%

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 2019-20. 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 £65.2 billion in 2019-20, an increase of 1.7%. This is equivalent to 7.9% of UK total non-North Sea current revenue which is 0.3 percentage points lower than Scotland’s share of the UK population.[12] 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 (4.3%), and inheritance tax (4.6%). This reflects the fact that properties and assets in Scotland tend to have lower values than the UK average.[13] Scotland’s share of income tax (6.7%) 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. Scotland also has a relatively low share of interest and dividend revenue. This reflects the fact that the Scottish Government receives proportionally less income from student loans, as the use of such loans is lower in Scotland.

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 11.7% 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,[14] and also the fact that Scotland has higher consumption of spirits than the rest of the UK.[15] 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 2015-16, at around 7.9%.

Table 1.2: Non-North Sea Revenue: Scotland as share of UK
per cent of UK revenue
2015-16 2016-17 2017-18 2018-19 2019-20
Income Tax 6.9% 6.7% 6.6% 6.7% 6.7%
Corporation tax (excl North Sea) 6.3% 6.6% 6.2% 6.2% 6.2%
National insurance contributions 7.9% 8.0% 8.0% 8.0% 7.9%
Value added tax 8.2% 7.9% 8.4% 8.4% 8.2%
Council tax and non-domestic rates 8.0% 8.0% 8.0% 7.9% 7.6%
All other revenue 8.9% 8.9% 9.0% 9.1% 9.1%
Total current non-North Sea revenue 7.9% 7.8% 7.9% 7.9% 7.9%

Estimated Revenue: Scotland and the UK, 2015-16 to 2019-20

Table 1.4 shows estimated current revenue in Scotland and the UK between 2015-16 and 2019-20. Non-North Sea revenue in Scotland is estimated to have grown by 15.3% between 2015-16 and 2019-20 in nominal terms, less than for the UK as a whole (15.9%). The majority of this difference is due to relatively slower growth in income tax in Scotland, which occurred in 2015-16 and 2016-17. However, based on HMRC’s indicative PAYE income tax liabilities, income tax in Scotland is estimated to have grown more quickly than the UK as a whole in 2018-19. More generally, slower growth in revenue in Scotland reflects the fact that Scotland’s population, and therefore its tax base, has grown more slowly than in the UK as a whole.

The structure of revenue in Scotland is changing with the devolution of additional tax powers. Table 1.4 shows separately land and buildings transaction tax and Scottish landfill tax, which were introduced in 2015‑16. The ‘UK stamp duties’ line for Scotland shows estimated receipts from stamp duty on shares and the annual tax on enveloped dwellings.

Table 1.3 shows estimates of revenue per person for Scotland and the UK between 2015-16 and 2019-20. Excluding North Sea revenue, revenue per person in Scotland is lower than in the UK by £431 in 2019-20. Including an illustrative geographical share of North Sea revenue the difference is £308.

Table 1.3: Revenue Per Person: Scotland and UK 2015-16 to 2019-20
£ per person
2015-16 2016-17 2017-18 2018-19 2019-20
Scotland
Excluding North Sea revenue 10,506 10,975 11,317 11,769 11,926
Including North Sea revenue (population share) 10,504 10,976 11,337 11,787 11,936
Including North Sea revenue (geographical share) 10,447 11,004 11,527 12,020 12,058
UK
Excluding North Sea revenue 10,919 11,508 11,752 12,174 12,357
Including North Sea revenue 10,918 11,508 11,772 12,192 12,367
Difference (Scotland minus UK)
Excluding North Sea revenue -413 -533 -435 -404 -431
Including North Sea revenue (population share) -413 -533 -435 -404 -431
Including North Sea revenue (geographical share) -471 -504 -244 -171 -308

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 2018-19 were published on 20 December 2019.[16]

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 lower 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 2015-16 to 2019-20
£ million
2015-16 2016-17 2017-18 2018-19 2019-20
Non-North Sea taxes
GERS 48,374 50,889 52,856 55,464 56,185
ONS 48,897 51,331 52,464 55,132 n/a
Difference -523 -442 392 332 n/a
Other non-North Sea receipts
GERS 8,156 8,484 8,576 8,612 8,970
ONS 8,133 8,486 8,580 8,853 n/a
Difference 23 -2 -4 -241 n/a
Geographical share of North Sea revenues
GERS -318 157 1,141 1,366 724
ONS -231 109 1,141 1,354 n/a
Difference -87 48 0 12 n/a
Table 1.4: Revenue: Scotland and UK 2015-16 to 2019-20
£ million
Scotland UK
2015-16 2016-17 2017-18 2018-19 2019-20 2015-16 2016-17 2017-18 2018-19 2019-20
Income tax 11,725 11,836 11,964 12,830 13,018 168,874 177,247 180,593 192,528 195,330
National insurance contributions 9,066 10,042 10,460 10,913 11,460 114,061 126,241 131,547 137,257 144,245
Value added tax 9,616 9,645 10,536 11,134 11,015 116,703 121,855 125,494 133,201 133,819
Corporation tax (excluding North Sea) 2,765 3,485 3,315 3,485 3,180 44,100 52,659 53,140 55,911 50,992
Fuel duties 2,318 2,373 2,426 2,428 2,392 27,621 27,937 27,878 27,993 27,572
Non-domestic rates 2,579 2,732 2,762 2,847 2,761 28,607 29,464 30,277 31,296 32,142
Council tax 2,045 2,074 2,253 2,359 2,487 28,986 30,361 32,131 34,831 36,575
VAT refunds 1,595 1,582 1,571 1,676 1,727 17,724 17,448 17,272 18,211 18,820
Capital gains tax 373 363 338 399 433 7,060 8,380 7,793 9,197 9,978
Inheritance tax 277 288 281 252 238 4,712 4,897 5,277 5,450 5,153
UK stamp duties 280 336 297 293 284 14,181 15,657 17,212 16,699 16,871
Scottish land & buildings transaction tax 425 484 557 554 598 425 484 557 554 598
Scottish landfill tax 147 149 148 149 119 147 149 148 149 119
Air passenger duty 246 256 274 290 273 3,040 3,236 3,360 3,636 3,385
Tobacco duties 1,011 1,075 1,123 1,170 1,240 9,106 8,681 8,766 9,152 9,692
Alcohol duties 1,030 1,076 1,122 1,175 1,149 10,697 11,117 11,585 12,097 11,716
Insurance premium tax 251 313 388 413 419 3,717 4,872 5,898 6,309 6,393
Vehicle excise duties 466 475 503 544 572 5,922 5,997 6,378 6,716 7,000
Environmental levies 507 590 674 753 748 4,526 5,172 5,850 6,494 6,430
Other taxes 1,651 1,716 1,864 1,803 2,073 20,503 20,959 23,005 21,667 24,225
Total Non-North Sea taxes 48,374 50,889 52,856 55,464 56,185 630,712 672,813 694,161 729,348 741,055
North Sea taxes
Population share of North Sea revenue -7 3 106 98 53 -85 36 1,297 1,195 650
Illustrative geographical share of North Sea revenue -318 157 1,141 1,366 724 -85 36 1,297 1,195 650
Other receipts
Interest and dividends 1,790 1,849 1,914 2,017 2,155 21,055 21,607 22,933 24,162 26,109
Gross operating surplus 5,892 6,169 6,217 6,153 6,294 56,724 58,355 56,598 52,782 53,835
Other receipts 474 466 445 443 520 3,922 3,812 3,575 3,567 4,397
Total revenue (excl North Sea revenue) 56,530 59,372 61,432 64,076 65,155 712,413 756,587 777,267 809,859 825,396
Total revenue (incl pop share North Sea revenue) 56,523 59,375 61,538 64,174 65,208 712,328 756,623 778,564 811,054 826,046
Total revenue (incl geog share North Sea revenue) 56,213 59,529 62,573 65,442 65,878 712,328 756,623 778,564 811,054 826,046
Of which, revenue accounting adjustment 5,802 6,091 6,227 6,421 6,545 60,070 61,877 63,435 65,553 66,835

Contact

Email: Economic.Statistics@gov.scot