Scottish Aggregates Tax rate policy for 2026-2027: island communities impact assessment

3. Who will SAT affect?

Aggregates are used for a variety of important uses, providing materials for housing, construction, road-building and other uses, and supporting employment, including in rural areas of the country. Aggregates are also required as construction materials to support the ambitions for the environment, including for diversification of Scotland’s energy mix. They are used both in and of themselves and mixed with other materials to produce new products used in construction such as mortar, asphalt and concrete.

The UKAL register maintained by HMRC shows that there are approximately 28 island-based taxpayers with a combined 40 registered quarry sites. Approximately seven of these sites are operated by Local Authorities.

In 2019, the Scottish Government commissioned the British Geological Survey (BGS) to produce a survey on aggregates production in Scotland and cross-border flows. This survey (the 2019 Aggregate Minerals Survey for Scotland) contains the latest available survey results.

To ensure confidentiality, data from this survey was aggregated to Local Authority level; some Local Authorities had to be grouped together; and the Scottish Government did not have access to any site level information.

The 2019 BGS survey highlights that aggregates are extracted and sourced across Scotland. Operating quarries which produce crushed rock, or quarries where sand or gravel is extracted or landed, are found in nearly all 32 local authority areas. Around 87% of aggregate produced in Scotland is crushed rock with the remainder being sand and gravel.

A Scotland specific breakdown of aggregate production is not available. However, research published by the Scottish Government suggests that the majority of total aggregate production in Scotland will be accounted for by a small number of major companies. Indicative forecasts assign about 15% of UK taxable primary aggregate production to Scotland suggesting around 30 million tonnes of taxable aggregate produced in Scotland annually.

HMRC data suggests that there are about 150 UKAL taxpayers who have sites registered in Scotland. Between them these taxpayers have around 320 sites in Scotland. About 14 taxpayers have sites registered in both Scotland and the rest of the UK. To improve the data on the Scottish aggregates sector, the Scottish Government has jointly commissioned, with the UK and Welsh Governments, the BGS to undertake a new aggregates survey in 2024, based on 2023 outputs. The survey findings are expected to be published in mid-2025.

The devolved tax will be charged on crushed rock, sand and gravel. It will be accounted for by primary aggregate-producing quarries and wharves at the point of commercial exploitation and will not significantly change the current tax landscape under the UKAL.

Additionally, the tax changes are not significantly different to what they are currently and aligning the SAT rate for 2026-27 with the UKAL rate is not intended to have significant impacts.

These proposals affect all persons who will be registered SAT taxpayers. Sectors and groups directly affected can be categorised as aggregate producers, aggregate users and aggregate supply chain operators.

Aligning the SAT rate for 2026-27 with the UKAL rate is not expected to have any additional burdens or differential impacts for island-based producers relative to the current arrangements.