Scottish Aggregates Tax: Options for approaching cross-border taxation – Consultation Analysis

5. Scottish Government Position

5.1 The Scottish Government has considered the range of responses to the consultation, and feedback from aggregate businesses received through separate direct engagement. The Scottish Government’s proposed policy approach, which will be confirmed in a Scottish Statutory Instrument in advance of SAT introduction on 1 April 2026, is outlined below.

Direct supply – collection

Summary of scenario: a customer based in Scotland collects aggregate directly from a quarry in the rest of the UK (rUK quarry), for use in Scotland.

Proposed final tax position: rUK quarry to account for and pay SAT.

Proposed approach:

• The rUK quarry registers and accounts for AGL as there is commercial exploitation in rUK when supply to a Scottish-based customer is made from the rUK quarry. However, the rUK quarry can claim an AGL tax credit, evidenced by the information obtained from the customer that the same supply of aggregate has moved from rUK to Scotland.
• The information obtained by the rUK quarry from their customer, which may be a tick box on the sales ticket to indicate where the aggregate has been supplied to, will allow the quarry operator to pay the correct tax and make a tax credit claim (if required).
• The rUK quarry will register and pay SAT as commercial exploitation of aggregate has been supplied to Scottish-based customer from rUK.

Indirect supply – middlemen – producer-based delivery

Summary of scenario: where aggregate is supplied from a rUK middleman to a Scottish-based customer but sourced from a rUK quarry. The quarry also delivers the aggregate to the Scottish-based customer on the middleman’s behalf.

Proposed final tax position: rUK quarry to account for and pay SAT.

Proposed approach:

• The rUK quarry registers and accounts for AGL as there is commercial exploitation in rUK when supplying aggregate to the rUK middleman. However, the rUK quarry can claim an AGL tax credit, evidenced by details of their delivery of the aggregate to a Scottish-based customer.
• The rUK quarry will register and pay SAT as there is also commercial exploitation when aggregate is supplied from the rUK quarry to the Scottish-based customer. SAT-liable sales will be identified using delivery location data.
• The middleman will not be required to register for SAT or AGL in relation to the aggregate sold to the Scottish-based customer as the tax has already been accounted for and paid by the rUK quarry.

Indirect supply – middlemen, over-the-counter sales

Summary of scenario: where a rUK based middleman, such as a builders’ merchant, supplies aggregate to a Scottish-based customer from their own stock of aggregates.

Proposed approach:

• The rUK quarry to register and account for AGL (commercial exploitation in rUK when physically supplying aggregate to rUK based middleman).
• To prevent double taxation, no SAT will be due on these transactions as AGL has already been paid further up the supply chain.
• · Neither the middleman nor any Scottish-based party in the supply chain would be required to register for or pay SAT. However, we would expect that the middleman would retain standard business accounting records relating to such transactions.

SAT Policy Update

5.2 In addition to the proposed cross border policy set out above, following the publication of the SAT cross border consultation, the Scottish Government announced in its Medium-Term Financial Strategy 2025^[3] that the SAT rate for 2026-27 will align with that of the UK Aggregates Levy.

5.3 As noted above, in advance of SAT introduction on 1 April 2026, the Scottish Government will introduce secondary legislation to the Scottish Parliament to implement provisions for cross-border taxation under SAT.

5.4 The UK Government will also be introducing legislation later this year to set out the UK policy position on cross-border transactions in advance of devolution of the tax to Scotland. We will continue to work with the UK Government to coordinate and provide further guidance on the interactions between SAT and AGL, including the treatment of cross-border supplies.