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Scottish Budget 2023-24: Your Scotland, Your Finances - guide

Information on how the Scottish Budget is funded, and the current spending plans for the year ahead.

This document is part of a collection


Each year the Scottish Government publishes a balanced Budget that sets out the spending plans for the new financial year. The annual Scottish Budget covers each financial year, which runs from 1 April until 30 March, with annual spending amounting to over £50 billion.

The Scottish Budget for 2023 to 2024 has been set at £59.7 billion and a detailed breakdown of spending plans is available.

This Budget comes at a critical point for Scotland. It seeks to balance the immediate pressures of our continued recovery from the pandemic along with supporting our three strategic priorities:

  • to eradicate child poverty
  • to enable the economy to transition to Net Zero
  • to create sustainable public services that support the needs of our people

The Budget is developed and delivered in partnership with the Scottish Green Party, delivering on commitments made as part of the Bute House Agreement.

Here is a summary of how the Scottish Budget is funded, and the key spending commitments for the year ahead.

How the Scottish Budget is funded

The Scottish Budget is funded mainly through annual funding from the UK Government, known as the Scottish block grant, and devolved tax revenues. The block grant is calculated with reference to changes in spending on equivalent public services in England. The Scottish Budget is allocated a population share of changes in funding using the Barnett formula, which is added to baseline funding to give the revised Scottish block grant for each year. This funding is added to the devolved tax income raised in Scotland to fund spending on devolved public services in Scotland.

There are rules that govern how Scotland receives and manages its funding and these are set out in the UK Government’s Statement of Funding Policy and in the Fiscal Framework. The Fiscal Framework is an agreement between the Scottish and United Kingdom governments, which details how Scotland must manage its funding. This includes limits on borrowing powers and on the use of a reserve to transfer funding between financial years. The agreement also details the arrangements for the adjustments made to the Scottish block grant, to account for the devolution of certain tax and social security powers – these are called ‘Block Grant Adjustments’. The Fiscal Framework agreement is currently under review. Read more about the Fiscal Framework.

What the Scottish Budget funds

Ultimately we are accountable to the Scottish Parliament and to the people of Scotland for the use of public money. Each year, Scottish Ministers develop spending proposals ahead of the new financial year. These proposals are published and presented to the Scottish Parliament with draft legislation (the annual Budget Bill) for scrutiny and approval by the Parliament.

Devolution allows the Scottish Parliament to decide how much money to spend on different policy areas, including schools, hospitals, policing, certain social security benefits, the economy, climate change and the environment. Delivery in these areas involves a range of partners including local government, public bodies and the third sector.

The UK Government is responsible for spending on areas that are reserved, including immigration, certain social security benefits, foreign policy and defence.

Scottish tax – raised in Scotland, spent in Scotland

The Scottish Parliament has the power to set the rates and bands of Income Tax paid by Scottish taxpayers on non-savings and non-dividend income. This is income earned through employment, self-employment, pensions or property.

Scottish Income Tax is collected by HMRC and the money raised through the tax is then transferred to the Scottish Government.

There are three taxes that are fully devolved and are set by the Scottish Parliament. These are:

  • Non-Domestic Rates (NDR), often referred to as ‘business rates’, are a tax paid on non-residential property. Current NDR rates
  • Land and Buildings Transaction Tax (LBTT) is a tax payable on land and property transactions in Scotland over a certain value. Current LBTT rates
  • Scottish Landfill Tax (SLfT) is a tax on the disposal of waste to landfill. The tax provides a financial incentive to reduce the amount of waste going to landfill. Current SLfT rates

Our animated video, ‘Raised in Scotland. Spent in Scotland.’ summarises how tax revenues contribute to the Scottish Budget.

Approach to taxation

Our approach to taxation is set out in the Framework for Tax. This document sets out the purpose, principles and policy objectives that underpin that approach.

It provides the foundation for design and delivery of tax policies that support our national outcomes and our pursuit of a fairer, greener and more prosperous Scotland for everyone.

Our progressive tax policies are designed to support those on lower and middle incomes, and our approach to taxation will continue to be guided by the strategic objectives and principles set out in our Framework for Tax, which underpins our fair and progressive approach. 

Our approach to taxation is also founded upon engagement with stakeholders. This allows us to understand and consider a wide range of views, including from the general public, when designing tax policy.

Our decisions on tax policies will raise the revenues needed to support Scotland’s economy, invest in vital public services, including the NHS and tackling child poverty.

Proposed Scottish income tax rates and bands for 2023 to 2024

Bands

Band name

Rate

£12,571* - £14,732

Starter Rate

19%

£14,733 - £25,688

Scottish Basic Rate

20%

£25,689 - £43,662

Intermediate Rate

21%

£43,663 - £125,140**

Higher Rate

42%

Over £125,140**

Top Rate

47%

* assumes individuals are in receipt of the Standard UK Personal Allowance.

** Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

Total spending plans for 2023 to 2024 - at a glance

The table below shows the approximate planned expenditure for each group of policy areas (known as portfolios) across the Scottish Government. Each portfolio supports Scottish Ministers in the delivery of our Programme for Government, and national outcomes for Scotland as set out in the National Performance Framework.

Scottish Government Portfolio

Total expenditure*

Health and Social Care

£19.2 billion

Social Justice, Housing and Local Government

£18.3 billion

Finance and Economy

£8.4 billion

Education and Skills

£4.2 billion

Justice and Veterans

£3.4 billion

Net Zero, Energy and Transport

£4.6 billion

Rural Affairs and Islands

£965 million

Constitution, External Affairs and Culture

£347 million

Deputy First Minister and Covid Recovery

£45 million

Crown Office and Procurator Fiscal Service

£197 million

* Figures are rounded

** The Scottish Budget also includes funding for the Scottish Parliament and for Audit Scotland, which total around £146 million.

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