Government Expenditure & Revenue Scotland (GERS) 2021-22

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

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Chapter 1 Public Sector Revenue

Total Public Sector Revenue: Scotland 2021-22
A breakdown public sector revenue by tax type

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 2021-22

Table 1.1 reports estimated public sector revenue in Scotland and the preliminary outturn data for the UK in 2021-22. 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 account for around two thirds of total non-North Sea revenue.

Overall, Scotland raised £73.8 billion in 2021-22, or 8.0% of total UK income. This represents an increase from a share of 7.9% in 2020-21, reflecting the growth in North Sea revenue, which grew by £2.7 billion to reach £3.5 billion in 2021-22, its highest level since 2013-14.

Excluding the North Sea revenue, Scotland's revenue increased to £70.3 billion, an increase of 13.6% as revenues began to recover from the impact of the pandemic. Scotland saw weaker growth in non-North Sea revenue than the UK, primarily due to weaker growth in income tax receipts and non-domestic rates income. For income tax, this reflects the latest 2021-22 Pay As You Earn (PAYE) income tax data from HMRC's Real Time Information system, where Scottish receipts grew by 11.6% in 2021-22 compared to growth of 14.5% for the UK as a whole. For non-domestic rates income, this will at least in part reflect the different timing and coverage of reliefs available in Scotland compared to other parts of the UK.

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 2021-22
Scotland UK Scotland as % of UK
£ million % of total non-North Sea taxes £ million
Income tax 14,875 24.4% 227,883 6.5%
National insurance contributions 12,243 20.1% 160,085 7.6%
Value added tax 11,796 19.4% 142,494 8.3%
Corporation tax (excluding North Sea) 3,898 6.4% 62,554 6.2%
Fuel duties 2,068 3.4% 25,943 8.0%
Non-domestic rates 2,108 3.5% 24,773 8.5%
Council tax 2,647 4.3% 39,598 6.7%
VAT refunds 1,964 3.2% 22,345 8.8%
Capital gains tax 683 1.1% 14,911 4.6%
Inheritance tax 281 0.5% 6,083 4.6%
Reserved stamp duties 354 0.6% 20,767 1.7%
Scottish land & buildings transaction tax 827 1.4% 827 100.0%
Scottish landfill tax 125 0.2% 125 100.0%
Air passenger duty 96 0.2% 1,189 8.1%
Tobacco duties 1,290 2.1% 10,191 12.7%
Alcohol duties 1,299 2.1% 13,206 9.8%
Insurance premium tax 474 0.8% 6,807 7.0%
Vehicle excise duties 557 0.9% 7,116 7.8%
Environmental levies 747 1.2% 6,296 11.9%
Other taxes1 2,524 4.1% 30,848 8.2%
Total Non-North Sea taxes 60,855 100% 824,041 7.4%
North Sea taxes2
Population share 262 3,214 8.1%
Geographical share 3,464 3,214 107.8%
Other revenue
Interest and dividends 2,044 23,844 8.6%
Gross operating surplus 6,983 62,140 11.2%
Other receipts 429 3,314 12.9%
Total revenue
Excluding North Sea 70,311 913,339 7.7%
Including population share of the North Sea 70,573 916,553 7.7%
Including illustrative geographical share of the North Sea 73,776 916,553 8.0%
of which: revenue accounting adjustments 7,454 77,108 9.7%

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

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.

Scotland's share of UK total non-North Sea revenue in 2021-22 was 7.7% which is 0.5 percentage points lower than Scotland's share of the UK population, and the lowest share on record.[8] Scotland's share of revenue has been declining over time in line with its declining population share.

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 (6.5%) 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 gross operating surplus (GOS), which includes the surpluses of public corporations. Scotland is estimated to generate approximately 11.2% 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 2017-18, at around 7.8%, but has declined slightly, in line with its share of the UK population.

Table 1.2: Non-North Sea Revenue: Scotland as share of UK
per cent of UK revenue
2017-18 2018-19 2019-20 2020-21 2021-22
Income Tax 6.6% 6.6% 6.8% 6.7% 6.5%
Corporation tax (excl North Sea) 6.2% 6.2% 6.2% 6.2% 6.2%
National insurance contributions 7.9% 7.7% 7.7% 7.6% 7.6%
Value added tax 8.4% 8.4% 8.2% 8.3% 8.3%
Council tax and non-domestic rates 8.0% 7.9% 7.7% 7.7% 7.4%
All other revenue 8.9% 9.0% 9.1% 9.0% 8.9%
Total current non-North Sea revenue 7.8% 7.8% 7.9% 7.8% 7.7%

Estimated Revenue: Scotland and the UK, 2017-18 to 2021-22

Table 1.4 shows estimated revenue in Scotland and the UK between 2017-18 and 2021-22. Non-North Sea revenue in Scotland is estimated to have grown by 14.9% between 2017-18 and 2021-22 in nominal terms, slower than the UK as a whole (17.1%). The largest single factor explaining this difference is weaker growth in national insurance receipts in Scotland, which reflects weaker growth in earnings and employment, the latter reflecting weaker population growth. The impact of this weaker earnings and employment on Scottish income tax receipts has to a degree been offset through policy changes in Scotland.

Table 1.3 shows estimates of revenue per person for Scotland and the UK between 2017-18 and 2021-22. Excluding North Sea revenue, revenue per person in Scotland is lower than in the UK by £805 in 2021-22. Including an illustrative geographical share of North Sea revenue the difference is £221, the smallest difference since 2014-15.

Table 1.3: Revenue Per Person: Scotland and UK 2017-18 to 2021-22
£ per person
2017-18 2018-19 2019-20 2020-21 2021-22
Scotland
Excluding North Sea revenue 11,270 11,710 11,937 11,317 12,831
Including North Sea revenue (population share) 11,289 11,728 11,947 11,325 12,879
Including North Sea revenue (geographical share) 11,480 11,960 12,090 11,457 13,463
UK
Excluding North Sea revenue 11,794 12,219 12,393 11,844 13,636
Including North Sea revenue 11,813 12,237 12,402 11,852 13,684
Difference (Scotland minus UK)
Excluding North Sea revenue -524 -509 -456 -527 -805
Including North Sea revenue (population share) -524 -509 -456 -527 -805
Including North Sea revenue (geographical share) -333 -277 -313 -395 -221

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 2020-21 were published on 27 May 2022.[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 2017-18 to 2021-22
£ million
2017-18 2018-19 2019-20 2020-21 2021-22
Non-North Sea taxes
GERS 52,725 55,292 56,166 52,976 60,855
ONS 52,352 55,115 56,412 53,370 n/a
Difference 373 177 -246 -394 n/a
Other non-North Sea receipts
GERS 8,449 8,462 9,059 8,924 9,456
ONS 9,066 9,138 9,978 10,253 n/a
Difference -617 -676 -919 -1,329 n/a
Geographical share of North Sea revenues
GERS 1,141 1,361 833 765 3,464
ONS 1,141 1,340 863 760 n/a
Difference 0 21 -30 5 n/a
Table 1.4: Revenue: Scotland and UK 2017-18 to 2021-22
£ million
Scotland UK
2017-18 2018-19 2019-20 2020-21 2021-22 2017-18 2018-19 2019-20 2020-21 2021-22
Income tax 11,912 12,769 13,069 13,010 14,875 180,609 192,499 193,557 195,556 227,883
National insurance contributions 10,362 10,643 11,211 11,016 12,243 131,627 137,534 144,713 144,033 160,085
Value added tax 10,610 11,177 11,076 9,712 11,796 126,374 133,589 134,845 117,473 142,494
Corporation tax (excluding North Sea) 3,335 3,428 3,154 3,423 3,898 53,972 55,025 50,596 54,916 62,554
Fuel duties 2,317 2,313 2,256 1,659 2,068 27,878 27,993 27,572 20,934 25,943
Non-domestic rates 2,762 2,847 2,761 1,816 2,108 30,317 31,412 31,631 19,463 24,773
Council tax 2,261 2,354 2,465 2,593 2,647 32,131 34,788 36,346 37,577 39,598
VAT refunds 1,571 1,665 1,757 1,779 1,964 17,272 18,214 18,878 20,184 22,345
Capital gains tax 310 449 450 510 683 7,793 9,197 9,826 11,130 14,911
Inheritance tax 281 252 238 247 281 5,277 5,450 5,150 5,350 6,083
UK stamp duties 296 293 296 298 354 17,212 16,699 16,972 14,637 20,767
Scottish land & buildings transaction tax 557 554 597 517 827 557 554 597 517 827
Scottish landfill tax 148 149 119 107 125 148 149 119 107 125
Air passenger duty 274 290 273 26 96 3,360 3,632 3,655 329 1,189
Tobacco duties 1,143 1,236 1,215 1,246 1,290 8,766 9,152 9,693 9,788 10,191
Alcohol duties 1,122 1,175 1,182 1,204 1,299 11,585 12,097 12,024 12,156 13,206
Insurance premium tax 387 421 453 438 474 5,898 6,306 6,480 6,306 6,807
Vehicle excise duties 498 520 548 545 557 6,378 6,667 7,000 6,964 7,116
Environmental levies 674 752 746 747 747 5,850 6,487 6,397 6,296 6,296
Other taxes 1,903 2,004 2,300 2,082 2,524 24,159 24,491 27,708 25,006 30,848
Total Non-North Sea taxes 52,725 55,292 56,166 52,976 60,855 697,163 731,935 743,759 708,722 824,041
North Sea taxes
Population share of North Sea revenue 106 98 53 43 262 1,297 1,196 643 522 3,214
Illustrative geographical share of North Sea revenue 1,141 1,361 833 765 3,464 1,297 1,196 643 522 3,214
Other receipts
Interest and dividends 1,760 1,817 1,911 1,984 2,044 21,131 22,116 23,626 23,601 23,844
Gross operating surplus 6,261 6,203 6,708 6,523 6,983 58,357 55,235 57,745 58,645 62,140
Other receipts 428 442 440 418 429 3,365 3,569 3,549 3,242 3,314
Total revenue (excl North Sea revenue) 61,174 63,754 65,225 61,900 70,311 780,016 812,855 828,679 794,210 913,339
Total revenue (incl pop share North Sea revenue) 61,280 63,852 65,277 61,942 70,573 781,313 814,051 829,322 794,732 916,553
Total revenue (incl geog share North Sea revenue) 62,315 65,114 66,057 62,665 73,776 781,313 814,051 829,322 794,732 916,553
Of which, revenue accounting adjustment 6,442 6,690 6,947 7,102 7,454 65,540 68,322 70,611 73,253 77,108

Contact

Email: economic.statistics@gov.scot

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