Scottish Aggregates Tax - administration regulations: business and regulatory impact assessment

Section 1: Background, aims and options

Purpose and intended effect

Background

The UK Aggregates Levy (“UKAL”), which came into effect in April 2002, was introduced to ensure that the environmental impacts of aggregates extraction not already addressed by regulation were more fully reflected in prices. It applies to the commercial exploitation of primary aggregates – mostly crushed rock, gravel and sand used as aggregates in, for example, construction.

The Scotland Act 2016 provided the Scottish Parliament with the legislative competence to introduce a devolved replacement for UKAL. When introduced, Revenue Scotland, Scotland's tax authority for devolved taxes, will be responsible for the collection and management of the Scottish Aggregates Tax (“SAT”).

The Aggregates Tax and Devolved Tax Administration (Scotland) Act 2024 (“the Act”) received Royal Assent on 12 November 2024, and the intended introduction date of SAT is 1 April 2026. To ensure the effective introduction of SAT, secondary legislation is required to specify the administration requirements associated with the tax, alongside making required changes to the Revenue Scotland and Tax Powers Act 2014 (“RSTPA 2014”) to support the operational effectiveness of SAT.

This is a Final Business and Regulatory Impact Assessment, which is published alongside the Scottish Statutory Instrument that will bring into force the overarching SAT administration regulations.

Objective

The purpose of these regulations is to ensure the effective introduction of SAT on 1 April 2026. These regulations will deliver the following outcomes:

• Effective administration regulations for SAT.
• Ensuring that SAT operates effectively in relation to the wider devolved taxes legislative regime, as set out in RSTPA 2014.

This assessment considers the business impacts associated with the introduction of secondary legislation setting out the SAT administration requirements for taxpayers and wider legislative changes to ensure that SAT can be introduced on 1 April 2026.

Rationale for Government intervention

The Scottish Government’s Framework for Tax provides the foundation from which SAT has been designed and will be delivered. The Framework ensures that decisions on tax policy are coherent and rooted in a defined set of principles and strategic objectives, rigorously appraised and developed through an established policy cycle, which puts proactive engagement with stakeholders and partners at the heart of tax policy making.

The Scottish Government intends that SAT will align with wider ambitions to deliver a fair, green and growing economy; in particular, the Scottish Government’s ambitions for a circular economy.

The circular economy aims to minimise our demand on primary resources and maximise the re-use, recycling and recovery of resources. Scotland's Circular Economy and Waste Route Map to 2030 sets out the importance of embedding circular construction practices to reduce resource needs, reduce waste and carbon, and encourage refurbishment and reuse. SAT will support the Scottish Government’s ambitions for a circular economy, in particular the ambition to embed circular construction practices. Although SAT in and of itself will not individually deliver the Scottish Government’s circular economy ambitions, it will serve as a price signal to complement other circular construction measures.

The Scottish Government commissioned research via ClimateXChange, a centre for expertise on climate change, to better understand the evidence base on the role of recycled aggregates. The research evaluates the potential role of alternatives to primary aggregates to deliver reductions in greenhouse gas emissions. It investigates the availability of alternatives to primary aggregates and analyses barriers to their uptake through literature review, data collection and stakeholder engagement. The research also includes case studies where alternatives to primary aggregates have been used in Scotland. The research report - The role of alternatives to primary aggregates in reducing emissions from the construction sector - was published in June 2025.

SAT will also add to the fiscal powers available to the Scottish Government and increase the proportion of the Scottish Budget raised in Scotland. The devolution of this power will provide scope for SAT to evolve over time, informed by Scotland-specific data collection and increased understanding of the tax and its impacts on the aggregates industry in Scotland.