Scottish Aggregates Tax (Miscellaneous Amendments) Regulations 2026: business and regulatory impact assessment

Section 1: Background, aims, and options

Background

The UK Aggregates Levy (AGL), 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^[1] provided the Scottish Parliament with the legislative competence to introduce a devolved replacement for AGL. 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^[2] (“the 2024 Act”) received Royal Assent on 12 November 2024, and the intended introduction date of SAT is 1 April 2026. This is subject to the successful introduction of secondary legislation in Scotland and UK Government legislation on AGL.

As a result of introducing the devolved tax in Scotland, there will be two different tax systems operating alongside one another in the UK. This has implications in terms of the treatment of cross-border movements of aggregate and, in some circumstances, the risk of double taxation.

In that context, there are a small number of direct and indirect cross-border scenarios related to the movement of aggregate to and from Scotland that required more detailed consideration and stakeholder engagement. These include, but are not limited to, movement of aggregate into Scotland from the rest of the UK (rUK) where there are multiple links in a supply chain; and where aggregate is collected from a current taxpayer under AGL on the same product that will be subject to SAT.

To ensure successful introduction of SAT, secondary legislation is required to ensure that there are effective approaches in place for cross-border scenarios for certain direct and indirect supplies of aggregate.

The Scottish Aggregates Tax (Miscellaneous Amendment) Regulations 2026 (“the cross-border regulations”) make provision in relation to the taxation of cross-border movements of aggregate.

This Business and Regulatory Impact Assessment (BRIA) will be published alongside the Scottish Statutory Instrument.

Objective

The purpose of these cross-border regulations is to make provision in relation to the taxation of cross-border movements of aggregate to ensure the effective introduction of SAT on 1 April 2026.

This assessment considers the business impacts associated with the introduction of regulations setting out the SAT cross-border requirements for taxpayers.

Rationale for Government intervention

The Scottish Government’s Framework for Tax^[3] 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 for primary resources and maximise the re-use, recycling, and recovery of resources. The Scottish Government publication, Delivering Scotland's circular economy - route map to 2025 and beyond^[4], 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 report^[5] was published in June 2025. The research found that, while there are promising pathways for the increased use of alternatives to primary aggregates in Scotland, strategic actions are required to address existing barriers and to support the transition towards a more sustainable construction sector.

SAT also adds to the fiscal powers available to the Scottish Government. The powers set out in the relevant legislation 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.