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

5. Assessment

During the consultation and engagement for the 2024 Act, a partial Island Communities Impact Assessment was completed and published alongside the consultation paper. Both documents invited views to help further inform the process to develop policies.

It was noted that island communities may have potential issues with regard to supply chains. SAT will aim to encourage the minimum necessary exploitation of primary aggregates, in order to maximise the use of secondary and recycled aggregates (which are exempt from the tax). Island communities may be disadvantaged due to their limited access to secondary and recycled aggregates, albeit the provisions in the 2024 Act largely reflect the core elements of the existing UK Aggregates Levy.

The partial Island Communities Impact Assessment was reviewed following consultation and stakeholder feedback, and in light of the provisions in Part 2 of the 2024 Act. It was concluded that the proposed amendments would have no adverse impact on island and rural communities. Therefore, a full Island Communities Impact Assessment as required under the Islands (Scotland) Act 2018, is not necessary. It was concluded that:

• The UK Aggregates Levy has been in operation since 2002 and currently applies in Scotland. A decision to not introduce the SAT (i.e. to effectively abolish the tax in Scotland) would therefore represent the position of greatest change. That would not be compatible with Scottish Government objectives, nor would it be a business-as-usual option.
• Taking account of stakeholder views, the 2024 Act will replicate the core structure of the UKAL, while also providing opportunities for improved collection and administration of the tax. It is therefore not considered that the replacement tax will impose any new or additional burdens on island Communities.
• It is assessed that the application of the tax will not result in any additional impacts on those that commercially exploit primary aggregates on Scottish Islands, when compared to those elsewhere in Scotland, nor any differential impact between producers on different islands.

For the reasons set out above, it is not considered that a full Islands Communities Impact Assessment is required.

Similarly, aligning the SAT rate for 2026-27 with the UK Aggregate Levy rate is not intended to have significant impacts and/or disproportionately disadvantage Scotland’s Island communities. It will not impose new requirements or regulatory burden on specific island communities. Our assessment did not identify any unique impacts on demographic, socio-economic, or linguistic considerations related to island communities.

To improve the data on the Scottish aggregates sector, the Scottish Government 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.

Aligning the SAT rate for 2026-27 with the UKAL rate is not intended to have significant impacts and/or disproportionately disadvantage Scotland’s Island communities.

Once operational, the Scottish Government and Revenue Scotland will keep the impact of the tax on island communities under review.