Scottish Local Government Finance Statistics 2024-25

2. Revenue Expenditure and Income

Revenue expenditure is the cost of delivering services each year and includes both service operating costs and overheads. These costs might include salaries, rent, building maintenance, supplies and services. The benefits from revenue expenditure are mainly received within the financial year. Revenue expenditure also includes costs that cannot be directly attributed to a service, such as the repayment of debt and where a local authority has used revenue resources to fund capital investment.

All local authorities are required to have a General Fund which is used to account for all revenue activity, except that relating to local authority housing. The General Fund is the principle revenue reserve of the local authority.

Where a council has housing stock, it is required to record expenditure and income relating to the direct provision of housing in their Housing Revenue Account (HRA). HRAs are generally self-financing, that is the income received is sufficient to cover expenditure incurred. Of the 32 councils, 26 have an HRA.

The Orkney County Council Act 1974 and the Zetland County Council Act 1974 require Orkney and Shetland to also hold a Harbour Account, a separate account and reserve fund specifically for harbour undertakings. Orkney and Shetland are also able to transfer money between their General Fund and their Harbour Accounts. For the purposes of this publication, expenditure and income relating to Harbour Accounts is included in General Fund figures unless otherwise stated.

Revenue expenditure is principally funded through service income and general funding – further detail on these sources of funding is provided in Chapters 2.1.4 and 2.3 respectively. Any deficit (+) in a local authority’s revenue account is met from their reserves, and any surplus (-) is added to a local authority’s reserves and carried forward to the next year. Chapter 2.4 provides more detail on the movement in General Fund and HRA reserves in 2024-25.

2.1 Expenditure and Income on Services

Net Revenue Expenditure, also known as the net cost of services, is the element of service expenditure that is funded by general funding or reserves. It is calculated as gross service expenditure minus gross service income. As shown in Table 2.1, the net revenue expenditure on local authority services, including HRA, was £14,887 million in 2024-25. This is an increase in net revenue expenditure of £586 million, or 4.1 per cent, on 2023-24.

For context, the GDP deflator, which can be viewed as a measure of general inflation in the domestic economy, was 4.03 per cent higher in 2024-25 when compared to 2023-24[1].

 

Table 2.1: Net Revenue Expenditure on Services in 2024-25, £ millions

Category	General Fund	HRA	Total
Gross Service Expenditure	24,829	1,023	25,852
Gross Service Income	9,404	1,561	10,965
Net Revenue Expenditure	15,425	-538	14,887

Source: LFR 00

2.1.1 Net Revenue Expenditure by Service

Chart 2.1 shows net revenue expenditure on services in Scotland in 2024-25. Education has the highest net revenue expenditure at £7,778 million followed by Social Work which has a net revenue expenditure of £4,873 million.

Chart 2.1: Net Revenue Expenditure in 2024-25 by Service, £ millions

Source: LFR 00

Table 2.2 shows how net revenue expenditure by service has changed between 2021-22 and 2024-25.

Table 2.2: Net Revenue Expenditure from 2021-22 to 2024-25 by Service, £ millions

Service	2021-22	2022-23	2023-24	2024-25	% change between 2023-24 & 2024-25
Education	5,867	6,471	6,960	7,778	11.7%
Culture & Related Services	592	651	675	651	-3.6%
Social Work	3,818	4,291	4,605	4,873	5.8%
Roads & Transport	404	437	454	441	-3.0%
Environmental Services	719	754	811	798	-1.5%
Building, Planning & Development	250	246	263	208	-20.8%
Central Services	363	340	692	401	-42.1%
Non-HRA Housing	291	322	339	328	-3.3%
Trading Services	-29	-25	-41	-52	28.6%
General Fund Net Revenue Expenditure	12,277	13,487	14,758	15,425	4.5%
Housing Revenue Account (HRA)	-527	-538	-457	-538	17.7%
Total Net Revenue Expenditure	11,750	12,950	14,300	14,887	4.1%

Source: LFR 00

Net revenue expenditure on Education has increased by 11.7 per cent, or £818 million, in 2024-25. This is driven by increases in net expenditure for Pre-Primary, Primary and Secondary Schools, which have increased by 96.8 per cent, 4.2 per cent and 5.0 per cent, or £528 million, £112 million and £136 million, respectively[2].

The increase of £528 million in net revenue expenditure for pre-primary education is due to the baselining of the Specific Grant for Early Learning and Childcare (£521.9 million).

Net revenue expenditure on special education increased by £53 million (6.0 per cent). Net revenue expenditure on Community Learning decreased by 3.7 per cent (£4 million).

Culture and Related Services saw a decrease of 3.6 per cent, or £24 million, in net revenue expenditure in 2024-25. The main underlying changes were a decrease in net expenditure of £15 million (-7.6 per cent) on Sport Facilities, a £9 million decrease (-6.3 per cent) on Community Parks and Open Spaces and a £2 million decrease (-3.4 per cent) on Museums & Galleries.

Net revenue expenditure on Social Work increased by 5.8 per cent, or £269 million, in 2024-25. Much of this increase is accounted for by Integrated Joint Boards (IJBs). Councils’ collectively transferred £291 million more funds to IJBs in 2024-25, compared to 2023-24. This resulted in an increase in net revenue for IJBs of £291 million.

Net revenue expenditure on Roads & Transport has decreased by 3.0 per cent, or £14 million, in 2024-25. Net revenue expenditure on parking services decreased by £22 million (47.2 per cent) as a result of increased parking income. Net revenue expenditure on Non-LA Public Transport: Support to Operators & Voluntary Groups increased by £6 million (5.8 per cent).

Environmental Services saw a decrease of 1.5 per cent, or £12 million, in net revenue expenditure in 2024-25. Of this decrease, £9 million related to Waste Collection.

Building, Planning & Development saw a decrease of 20.8 per cent, or £55 million, in net revenue expenditure in 2024-25, compared to 2023-24. Most of this decrease is accounted for by Economic Development, which decreased by £52 million.

Net revenue expenditure on Central Services decreased by 42.1 per cent, or £291 million, between 2023-24 and 2024-25. The 2023-24 figure was high as it included the £260 million in Equal Pay payments that were made by Glasgow City Council during 2023-24.

Net revenue expenditure on Non-HRA Housing decreased by 3.3 per cent, or £11 million, in 2024-25.

HRA and Trading Services both have negative net revenue expenditure, which means that the service income received for these services was more than the expenditure incurred to provide these services. As such, negative net revenue expenditure can be considered as net income. For 2024-25, net expenditure for Trading Services decreased by 28.6 per cent to negative £52 million (it was negative £41 million in 2023-24). Net expenditure for HRA has decreased between 2023-24 and 2024-25, from -£457 million to - £538 million. – that is, the overall net income that local authorities have received from their HRA has increased.

2.1.2 General Fund Net Revenue Expenditure by Council

Source: LFR 00, Scotland’s National Records of Scotland Mid-2024 population estimates

2.1.3 Gross Service Expenditure

Gross Service Expenditure is the total expenditure on local authority services within a financial year, adjusted for any intra / inter-authority transfers. In 2024-25, gross service expenditure was £25,852 million, an increase of 2.5 per cent, or £620 million, from 2023-24. Table 2.3 shows gross service expenditure by type of expenditure from 2020-21 to 2024-25.

Table 2.3: Gross Service Expenditure from 2020-21 to 2024-25 by Expenditure Type, £ millions

Expenditure Type	2020-21	2021-22	2022-23	2023-24	2024-25	% change between 2023-24 & 2024-25
Employee Costs	8,191	8,611	9,305	10,341	10,211	-1.3%
Operating Costs	8,066	8,400	9,046	9,706	10,164	4.7%
Transfer Payments	4,724	5,026	5,432	5,599	5,907	5.5%
Support Services	743	785	832	898	910	1.2%
Adjustment for Intra / Inter Authority Transfers	-1,253	-1,223	-1,224	-1,313	-1,340	2.1%
Gross Service Expenditure	20,471	21,599	23,390	25,232	25,852	2.5%

Source: LFR 00

In 2024-25, employee costs were the largest element of gross service expenditure, accounting for £10,211 million. These costs relate to salaries and wages, national insurance and superannuation contributions, cash allowances paid to employees, redundancy and severance payments and any other costs relating to employees. Employee costs in 2024-25 have decreased by 1.3 per cent, or £131 million, from 2023-24. Employee costs have increased by 24.7 per cent, or £2,019 million, over the last five years.

Operating costs relate to costs for premises, transport, supplies and services, as well as payments made to third parties. In 2024-25, these accounted for £10,164 million of gross expenditure – an increase of 4.7 per cent, or £458 million, from 2023-24. This increase predominantly relates to an increase in payments to third parties.

Transfer payments accounted for £5,907 million of gross service expenditure in 2024-25, an increase of 5.5 per cent, or £309 million, from 2023-24. This expenditure relates to payments for which no goods or services are received in return by the local authority, including payment of Housing Benefit and transfers to IJBs.

Support services costs are the smallest component of gross service expenditure, accounting for £910 million. This is an increase of 1.2 per cent, or £11 million, from 2023-24. These are costs that are paid for services that support the provision of services to the public, such as IT, Human Resources, Legal services, Procurement services, and Corporate services.

An adjustment for intra / inter-authority transfers of -£1,340 million has been made to the aggregate gross service expenditure figure. This is to prevent double counting of expenditure caused by transfers between different services within an authority and between different local authorities. The adjustment removes the total recharge income from other services, contributions from other local authorities and requisition income for VJBs and RTPs. Following the adjustment, expenditure is only reported against the authority or service area that commissioned the service.

Chart 2.3 shows the breakdown of gross service expenditure by service and by expenditure type. Education has a higher proportion of employee costs than other services – this is due to the higher number of staff employed within Education, in particular teachers. Social Work and Non-HRA Housing have high proportions of transfer payments which relates to amounts transferred to IJBs and the payment of Housing Benefits respectively. Other has the largest adjustment for intra / inter authority transfers which is due to Central Services and Trading Services having particularly high amounts of recharge income from other services.

Chart 2.3: Gross Service Expenditure in 2024-25 by Service and Expenditure Type, £ millions

Please note that ‘Other’ consists of Building, Planning & Development Services, Central Services and Trading Services.

Source: LFR 00

2.1.4 Gross Service Income

Gross Service Income is the total income a local authority receives directly in relation to services they provide. In 2024-25, local authorities received £10,965 million in service income, an increase of 0.3 per cent, or £34 million, from 2023-24.

Local authorities receive service income from a variety of sources. Table 2.4 shows gross service income by type of income from 2020-21 to 2024-25.

Table 2.4: Gross Service Income from 2020-21 to 2024-25 by Income Type, £ millions

Income Type	2020-21	2021-22	2022-23	2023-24	2024-25	% change between 2023-24 & 2024-25
Government Grants	2,866	2,884	2,857	2,801	2,270	-19.0%
Other Grants, Reimbursements and Contributions	4,003	4,249	4,676	4,946	5,245	6.0%
Customer and Client Receipts	2,494	2,715	2,908	3,184	3,450	8.3%
Gross Service Income	9,363	9,849	10,440	10,931	10,965	0.3%

Source: LFR 00

Government grants relates to grants local authorities receive to support specific services from either the Scottish or UK Governments, including Ring-Fenced Revenue Grants (RFRGs) and grants from the Department for Work & Pensions (DWP) for Housing Benefit payments. These figures will reflect the amount of grants used in the year specified – this may not match the amount of grants local authorities received in that year. This category does not include General Revenue Grant (GRG) as that is not provided to local authorities to fund a specific service. In 2024-25, government grants accounted for £2,270 million of service income, a decrease of 19.0 per cent, or £531 million, from 2023-24.

This decrease is the result of baselining £950.9 million of specific grants into the General Revenue Grant (GRG)[3]. This decrease was partially offset by an increase in £420 million of other government grants, so that the result is a decrease of £531 million.

Other grants, reimbursements and contributions includes contributions from NHS Boards and income from IJBs to commission social care services. This accounted for £5,245 million of service income in 2024-25 – an increase of 6.0 per cent, or £299 million, from 2023-24.

Customer and client receipts is income local authorities have received for sales, rents, fees and charges for services they provide. In 2024-25, this accounted for £3,450 million of service income, an increase of 8.3 per cent, or £266 million, from 2023-24.

Chart 2.4 shows the breakdown of gross service income by service and income type. Social Work has the largest amount of service income, the majority of which is from other grants, reimbursements and contributions. This relates to amounts received from IJBs to commission social care services, as well as contributions received from NHS Boards.

Both Non-HRA Housing and Education have high proportions of service income from government grants. For Non-HRA Housing, this relates to grants from the DWP to fund Housing Benefit payments.

For Education, the baselining of the Specific Grant for Early Learning and Childcare (£521.9 million in 2024-25) into the General Revenue Grant has resulted in a corresponding reduction in Ring Fenced Revenue Grants that local authorities received from Scottish Government.

Service income for the HRA is almost entirely made up of customer and client receipts which predominantly relates to rent payments received.

Chart 2.4: Gross Service Income in 2024-25 by Service and Income Type, £ millions

Please note that ‘Other’ consists of Building, Planning & Development Services, Central Services and Trading Services.

Source: LFR 00

In 2024-25, 40 per cent of service expenditure was met by service income. Chart 2.5 shows the proportion of service expenditure met by service income for each service. This varies significantly between services as they each receive different levels of grants and contributions, and services have differing abilities to generate service income in the form of customer and client receipts.

Service income exceeded service expenditure for HRA and Trading Services, generating surplus income for both services.

Service income was less than service expenditure for all other services, with the amount of service expenditure being funded by service income ranging from 6 per cent for Education Services to 85 per cent for Non-HRA Housing.

Chart 2.5: Service Expenditure met by Service Income in 2024-25 by Service, £ millions

Source: LFR 00

 

2.2 Other Expenditure and Income

Local authorities will also incur some revenue expenditure and income that is not attributable to specific services, such as interest paid or received, statutory repayment of debts, contributions to capital expenditure, proceeds of trading operations and any other operating expenditure.

In 2024-25, local authorities incurred £1,844 million of other expenditure and income. Table 2.5 provides a breakdown of this figure, split by the General Fund and HRA. Total interest paid was £1,156 million in 2024-25.

Table 2.5: Other Expenditure and Income in 2024-25, £ millions

Expenditure / Income Type	General Fund	HRA	Total
Interest Payable and Similar Charges	928	229	1,156
Interest Receivable and Similar Income	-164	-11	-175
Statutory Repayment of Debt	431	161	591
Capital Expenditure Funded from Revenue	113	159	272
Surplus (-) or Deficit (+) from Trading Operations	0	0	0
Other Operating Expenditure	-1	0	-1
Total Other Expenditure and Income	1,306	537	1,844

Please note the following:

Income figures are presented as negative in this table.

‘Interest Receivable and Similar Income’ includes losses arising from derecognition of financial assets and recognition of credit losses on financial assets.

‘Statutory Repayment of Debt’ includes repayments relating to lending to other statutory bodies and so will differ to the repayment figures in Chapter 5.

Source: LFR A0

 

2.3 General Funding

General funding, referred to as ‘Taxation and Non-Specific Grant Income’ within local authorities’ accounts, principally consists of the General Revenue Grant (GRG) and local taxation, specifically Non-Domestic Rates (NDR) and Council Tax.

Total general funding available to authorities in 2024-25 was £16,412 million, an increase of 9.5 per cent, or £1,429 million, from 2023-24. Around two thirds of this increase can be attributed to the baselining of £950.9 million into the General Revenue Grant (GRG)[4]. Note, the corresponding reduction in Ring Fenced Revenue Grants is covered in Table 2.4 in the previous section.

Chart 2.6 shows the total general funding available to local authorities in 2024-25 by type of funding.

Chart 2.6: General Funding in 2024-25 by Source, £ millions

Please note that ‘Other Funding’ includes government grants paid to joint boards and income received through NDR TIF and NDRIS schemes (Chapter 2.3.5).

Source: LFR A0

General Revenue Grant (GRG) is the general grant paid to local authorities by the Scottish Government, including monies from the UK Government payable to a local authority, and is the main source of funding for local authorities. In 2024-25, GRG accounted for £10,337 million, or 63 per cent, of general funding. See Annex C for how this figure is derived[5].

NDR accounted for £3,068 million, or 19 per cent, of general funding. The Scottish Government guarantees the combined sum of GRG and NDR funding to local authorities in each financial year. More detail on NDR is provided in Chapter 2.3.2 and more information on the process to determine local government funding from the Scottish Government is available in the Local Government Funding: Process Overview publications.

Council Tax accounted for £2,997 million, or 18 per cent, of general funding in 2024-25 – this is consistent with prior years. More information on Council Tax is provided in Chapter 2.3.1.

Other funding was £11 million in 2024-25. Previous years included capital to revenue transfers permitted under statute to fund local government pay deals or to meet the principal element of loans fund repayments.

Table 2.6 shows the breakdown of general funding figures between 2020-21 and 2024-25. As the combined total of NDR and GRG provided to local authorities is guaranteed, any decrease in the amount of NDR collected is compensated for by a corresponding increase in GRG.

Council Tax has continued the steady increase seen over the last five years, with an increase of 2.2 per cent, or £66 million, from 2023-24.

Table 2.6: General Funding from 2020-21 to 2024-25 by Source, £ millions

General Funding Source	2020-21	2021-22	2022-23	2023-24	2024-25	% change between 2023-24 & 2024-25
GRG	9,308	9,014	8,672	8,920	10,337	15.9%
NDR Distributable Amount	1,868	2,090	2,765	3,045	3,068	0.7%
Council Tax	2,581	2,640	2,767	2,931	2,997	2.2%
Other Funding	77	44	30	87	11	-87.7%
Total General Funding	13,834	13,788	14,234	14,983	16,412	9.5%

Please note the following:

‘Other Funding’ includes government grants paid to joint boards, income received through NDR TIF and NDRIS schemes plus capital to revenue transfers.

Source: LFR A0

2.3.1 Council Tax

Council Tax was introduced in Scotland on 1 April 1993 to replace the Community Charge. It is a tax system based on dwellings and is a component of general funding for local authorities.

There are three factors that determine the amount of Council Tax that a dwelling is liable for:

1. The market value of the dwelling as at the 1 April 1991. Each dwelling is placed into one of eight bands from A to H, with Band A dwellings liable for the lowest rates of Council Tax and Band H attracting the highest.
2. The Band D rate which is set by the local authority, with other bands calculated as a ratio to Band D. The ratios determining the charges for properties in bands E to H were revised in 2018-19.
3. A range of discounts, exemptions, reductions and increases that are available in certain circumstances, or in some cases an increase in Council Tax due to the application of a levy.

The valuation range and ratio for each Council Tax band is given in Table 2.7.

Table 2.7: Valuation Range and Ratios by Council Tax Band

Band	Valuation Band Ranges as at 1 April 1991	Ratio to Band D	No. of Chargeable Dwellings as at September 2024	Proportion of Chargeable dwellings
Band A	Under £27,000	6/9	497,867	19.1%
Band B	£27,001 to £35,000	7/9	581,576	22.3%
Band C	£35,001 to £45,000	8/9	423,304	16.3%
Band D	£45,001 to £58,000	9/9	365,001	14.0%
Band E	£58,001 to £80,000	473/360	362,354	13.9%
Band F	£80,001 to £106,000	585/360	217,954	8.4%
Band G	£106,001 to £212,000	705/360	140,162	5.4%
Band H	Over £212,000	882/360	14,327	0.6%
Total			2,602,545	100.0%

Please note the following:

“n/a” indicates where a total value is not applicable.

The ratios quoted applied from 2017-18 onwards.

Source: CTaxbase

2.3.1.1 Collection and Yield of Council Tax

Local authorities are responsible for billing and collecting Council Tax. Before the start of each financial year, local authorities issue Council Tax bills to householders in each dwelling. Each bill is calculated by applying the appropriate band rate for the local authority, then applying any discounts, exemptions, reductions or increases – further details are provided in Tables 2.12 and 2.13.

Council Tax Potential Yield refers to the Council Tax yield if all dwellings paid the full rate for their relevant Band and local authority. Chart 2.7 illustrates the gross Council Tax potential yield broken down into the Council Tax billed and the amounts not billed due to discounts and exemptions, or where the Council Tax Reduction (CTR) scheme has reduced a household’s Council Tax liability.

Chart 2.7: Council Tax Potential Yield in 2024-25, £ millions

Source: CTaxbase and CTRR

Local Authority	Net Council Tax Income
Aberdeen City	143,678
Aberdeenshire	170,446
Angus	58,344
Argyll & Bute	66,948
City of Edinburgh	330,188
Clackmannanshire	26,005
Dumfries & Galloway	79,364
Dundee City	66,343
East Ayrshire	59,317
East Dunbartonshire	72,555
East Lothian	72,867
East Renfrewshire	63,328
Falkirk	78,618
Fife	194,348
Glasgow City	276,965
Highland	153,234
Inverclyde	36,037
Midlothian	58,294
Moray	52,553
Na h-Eileanan Siar	14,681
North Ayrshire	66,140
North Lanarkshire	141,657
Orkney Islands	12,461
Perth & Kinross	100,379
Renfrewshire	97,701
Scottish Borders	69,499
Shetland Islands	11,328
South Ayrshire	67,939
South Lanarkshire	161,060
Stirling	60,177
West Dunbartonshire	41,701
West Lothian	92,694
Scotland	2,996,849

Please note that figures relate to income collected in 2024-25, which can include amounts that were billed in previous years.

Source: LFR A0

2.3.1.2 Chargeable Dwellings

Table 2.9 shows the number of dwellings in Scotland for each September from 2020-21 to 2024-25. There were a total of 2.741 million dwellings in Scotland in 2024-25, of which 138,428 were exempt for Council Tax purposes. This gave 2.603 million chargeable dwellings in 2024-25, an increase of around 3 per cent, or 79,658 dwellings, since 2020-21.

Table 2.9: Total Number of Dwellings from 2020-21 to 2024-25

Financial Year	Total Dwellings	Exempt Dwellings	Chargeable Dwellings
2020-21	2,653,732	130,845	2,522,887
2021-22	2,674,729	134,096	2,540,633
2022-23	2,699,040	136,683	2,562,357
2023-24	2,720,920	139,192	2,581,728
2024-25	2,740,973	138,428	2,602,545

Source: CTaxbase

Chart 2.8: Proportion of Chargeable Dwellings at September 2024 by Local Authority and Council Tax Band

Source: CTaxbase

2.3.1.3 Council Tax Rates and Average Bills

Each local authority determines their own Band D rate of Council Tax as part of their budget setting process. The rate for other bands is then calculated as a set ratio of the Band D rate, see Table 2.7, and so each local authority has different Council Tax rates. The 2024-25 Band D Council Tax rates for each local authority are shown in Chart 2.9 ranging from £1,261 in Shetland to £1,547 in Inverclyde. The Scotland Average Band D Council Tax Rate was £1,418, compared to £1,417 in 2023-24.  It should be noted that there was a national council tax freeze in 2024-25 (Inverclyde was the only council to raise rates, however this increase was reversed in the form of a rebate to residents).

Chart 2.9: Band D Council Tax Rate in 2024-25 by Local Authority

Source: CTAS

From 2007-08 to 2016-17, the Scottish Government and local government worked in partnership to freeze Council Tax rates each year. The one exception is Stirling, who reduced their Band D rate from £1,223 in 2007-08 to £1,209 in 2008-09, and subsequently to £1,197 in 2012-13. The Council Tax freeze caused the Scotland average Band D Council Tax rate to remain steady at £1,149 from 2007-08 to 2016-17 – a fall in real terms.

After nine years of the Council Tax freeze, the Scottish Government secured the agreement of local authorities to cap locally determined Council Tax increases to three per cent in cash terms in both 2017-18 and 2018-19. This continued into 2019-20 and 2021-22, when local government agreed Council Tax increases to be capped at three per cent in real terms, which was 4.79 per cent in cash terms in 2019-20 and 4.84 per cent in 2020-21. All 32 local authorities froze their Council Tax rates for 2021-22[6].

For 2022-23, the overall increase was 2.98 per cent in cash terms, based on the Scotland Average Band D Council Tax Rate and there was a 5.2 per cent increase between 2022-23 and 2023-24.  There was another national Council Tax freeze in 2024-25.

The average Council Tax bill per dwelling in 2024-25 was £1,310. This differs from the average Band D rate due to the distribution of dwellings across Council Tax bands, as can be seen in Table 2.7 and Chart 2.7, and the application of discounts.

Table 2.10 shows how the average Council Tax bill for Scotland has changed each year from 2020-21[7].

Table 2.10: Average Council Tax Bill per Dwelling from 2020-21 to 2024-25

Financial Year	Before CTR	After CTR
2020-21	£1,201	£1,053
2021-22	£1,198	£1,057
2022-23	£1,238	£1,096
2023-24	£1,302	£1,152
2024-25	£1,310	£1,160

Please note that the minor changes between years where Council Tax was frozen are due to a number of factors, including the distribution of dwellings across bands; discounts and exemptions; new construction and removal of demolished housing from the roll.

Source: CTAS, CTaxbase and LFR 12

2.3.1.4 Council Tax Reduction (CTR)

Table 2.11: CTR Funding and Reduction in Liability in 2024-25 by Local Authority, £ thousands

Local Authority	CTR Funding from SG	Final total reduction in liability
Aberdeen City	11,057	12,628
Aberdeenshire	8,955	9,749
Angus	5,532	6,049
Argyll & Bute	5,454	5,953
City of Edinburgh	25,522	27,395
Clackmannanshire	3,734	4,190
Dumfries & Galloway	9,656	10,807
Dundee City	12,435	13,617
East Ayrshire	9,454	10,354
East Dunbartonshire	4,843	5,347
East Lothian	5,559	6,270
East Renfrewshire	4,053	4,400
Falkirk	8,947	10,058
Fife	21,196	23,873
Glasgow City	70,374	77,273
Highland	12,583	13,652
Inverclyde	6,733	7,917
Midlothian	4,904	5,876
Moray	3,908	4,335
Na h-Eileanan Siar	1,253	1,332
North Ayrshire	12,820	14,159
North Lanarkshire	23,583	26,258
Orkney Islands	963	990
Perth & Kinross	6,818	7,590
Renfrewshire	12,751	13,666
Scottish Borders	5,412	5,745
Shetland Islands	720	779
South Ayrshire	8,220	9,077
South Lanarkshire	21,095	23,613
Stirling	4,467	5,108
West Dunbartonshire	7,563	9,141
West Lothian	10,435	11,809
Scotland	351,000	389,010

Source: CTR Extracts and LFR 12

2.3.1.5 Changes to Council Tax Liabilities

Not all dwellings are liable to pay the full rate of Council Tax. Discounts, exemptions and increased rates can be charged for certain types of dwellings, and the CTR scheme is available to support lower income households in meeting their Council Tax liabilities.

Table 2.12 summarises the range of discounts, exemptions and reductions available and the change in liability that applies to each type. Please note that, in some cases, more than one type of discount, exemption or reduction may apply. The examples given in Table 2.12 are typical but not exhaustive. A full explanation of Council Tax discounts and exemptions is available on the Scottish Government website.

Table 2.12: Council Tax Discounts, Exemptions, Reductions and Increases

Please note that in 2013-14, local authorities gained the discretionary power to remove the discount for Second Homes / Long Term Empty, or set a Council Tax increase of 100% on ‘Long Term Empty – More than 12 months’ properties.

Type of Support	2020-21	2021-22	2022-23	2023-24	2024-25
Disability reduction	14,009	13,988	14,096	14,686	15,082
Single Person Discount	1,004,557	1,025,094	1,037,962	1,048,186	1,054,874
Second Homes	24,466	23,890	24,287	24,061	21,606
Empty Properties	47,333	43,766	44,601	46,217	43,538
Occupied entirely by disregarded adults	1,500	1,460	1,434	1,462	1,495
Dwellings not subject to discount	1,445,031	1,446,423	1,454,073	1,461,802	1,480,941
Council Tax Reduction recipients	500,620	482,060	462,200	460,750	460,680
All chargeable dwellings	2,522,887	2,540,633	2,562,357	2,581,728	2,602,545

Please note the following:

Some dwellings may be eligible for more than one type of support, in these cases, the dwelling will be counted under each type of support it is eligible for.

It is not possible for some local authorities to separately identify Second Homes and Long Term Empty dwellings. For these authorities, the total number of Second Homes and Long Term Empty dwellings has been recorded under Second Homes.

Source: CTaxbase and CTR Extract

2.3.2 Non-Domestic Rates (NDR)

Non-Domestic Rates (NDR) are a property tax for which the occupier of a non-domestic property is generally statutorily liable. A non-domestic property is an individual property used for non-domestic purposes, such as business premises and third and public sector properties.

The principles of NDR were established in the Lands Valuation (Scotland) Act 1854. This Act also provided for the appointment of the Scottish Assessors, who are responsible for determining the classification and valuation of non-domestic and domestic properties and are independent of both the Scottish Government and local authorities.

Non-domestic rates generated £3,146 million of net income in 2024-25, as shown in Table 2.14. This is the total contributable amount of NDR income (NDRI). The contributable amount is equivalent to the gross amount paid by ratepayers, net of any reliefs which are funded by the Scottish Government. However, the contributable amount is not net of any reliefs funded by local authorities themselves, and so it differs from the amount collected from ratepayers (the collectable amount).

Each local authority reports their Provisional Contributable Amount (PCA) to the Scottish Government at the start of the year. This is included in the annual NDR account and published as part of the Scottish Government’s overall annual accounts. The amount to be distributed to each authority as part of the annual local government finance settlement is known as the distributable amount and is set by the Scottish Government before the start of the financial year. In 2024-25, the distributable amount was set at £3,068 million – see Chart 2.6 and Table 2.14.

Table 2.14: NDR Contributable and Distributable Amounts from 2020-21 to 2024-25, £ millions

NDR Type	2020-21	2021-22	2022-23	2023-24	2024-25
NDR contributable Amount	1,816	2,108	2,792	3,033	3,146
NDR distributable Amount	1,868	2,090	2,766	3,047	3,068

Please note that the NDR Contributable Amounts reflect the final, audited income figures collected by local authorities, except for 2022-23, 2023-24, and 2024-25 which are the Notified (provisional outturn) figures as the audits are not yet finalised for all councils. They are net of reliefs paid by Scottish Government, but gross of all local reliefs and top-ups to discretionary amounts paid by councils themselves.

Source: NDRI Audited Returns, Local Government Finance Circulars

Local authorities retain all of the NDRI collected in their area. However, the contributable amount that they report is notionally pooled and then redistributed to councils as the distributable amount of NDRI, allocated to each local authority in proportion to each one’s most recent prior year NDRI mid-year estimate. As the combined total of NDRI and General Revenue Grant (GRG) provided to local authorities is guaranteed by the Scottish Government, any decrease in the amount of NDRI collected is compensated for by a corresponding increase in GRG and vice versa. Any changes from the provisional contributable amount reported to the final outturn contributable amount in any year is accounted for in the calculation of future years’ distributable amounts.

The distributable amount is based upon the forecast of the NDRI contributable amount made prior to the start of the year by the Scottish Fiscal Commission (SFC) and includes prior year adjustments. This is presented in Figure S2.11 in chapter 2 supplementary figures workbook of the SFC’s publication ‘Scotland’s Economic and Fiscal Forecasts – December 2024’. The distributable amount is therefore not likely to match exactly the NDRI received in any year, as shown in Table 2.14, nor the total eventual contributions to the pool for any year. Final contributions to the pool are generally based on councils’ PCA, adjusted by the amount by which the previous year’s final outturn differs from the previous year’s PCA. Final contributions to the pool (and distributions to councils) are set out in the non-domestic rating account.

2.3.3 Rateable Values (RVs)

NDR bills are based on the Rateable Value (RV) of a property. The RV is based on a legally defined valuation and broadly corresponds to the notional rental value the property could achieve in the open market if it were vacant and available to let, taking account of the type and nature of the property. As such, it is not necessarily a reflection of the profitability, turnover or output of the ratepayer.

The RV of a non-domestic property is generally initially established when the property comes into existence, subject to rating exemptions (for instance, agricultural lands and buildings are exempt from rating). Rateable non-domestic properties and their corresponding RVs are listed on the valuation roll, which is maintained by the Scottish Assessors. RVs are periodically updated at non-domestic revaluations. The latest revaluation before 2024-25, assigning updated RVs to all non-domestic properties in Scotland, took effect in April 2023. Revaluations historically took place on a five-year cycle; however, there was a seven-year cycle following the 2010 revaluation and a six-year cycle following the 2017 revaluation, the latest revaluation having been delayed to 2023 due to the Covid-19 pandemic. Future revaluations will take place every three years, as recommended by the Barclay Review, with the next one after the 2023 revaluation planned to take effect on 1 April 2026.

Table 2.15 shows the types of properties, and associated RV on the valuation roll, by property type as at 1 April 2024. The valuation roll is continually updated, and the NDRI for 2024-25 would not have been based solely on the snapshot of the valuation roll at April 2024. The composition of the valuation roll as at 1 April 2025 is also shown in Table 2.14b, Table 2.15a and Chart 2.10a in the associated Excel file. The latest valuation roll statistics are available from the Scottish Assessors Association website.

As at 1 April 2024, there were 259,680 properties on the valuation roll, with a total RV of £7.7 billion, as shown in Table 2.15. Industrial subjects and shops were the most prevalent types of property on the valuation roll, making up 23 per cent and 21 per cent of the number of properties, and 18 per cent and 19 per cent of the total RV respectively. Offices are the next largest category in terms of numbers. Together, these three categories accounted for 62 per cent of properties on the valuation roll, and 51 per cent of total RV.

Table 2.15: NDR Properties at 1 April 2024 by Property Class

Category	Number of properties	% of Properties on Valuation Roll	Rateable Value, £ thousands	% of RV on Valuation Roll
Shops	54,827	21.1%	1,454,664	18.9%
Public houses and restaurants	3,597	1.4%	120,690	1.6%
Offices	44,428	17.1%	1,031,389	13.4%
Hotels	5,118	2.0%	289,933	3.8%
Industrial subjects	60,528	23.3%	1,406,556	18.3%
Leisure, entertainment, caravans, etc.	26,923	10.4%	347,776	4.5%
Garages and petrol stations	3,874	1.5%	77,940	1.0%
Cultural	1,356	0.5%	57,172	0.7%
Sporting subjects	12,984	5.0%	41,373	0.5%
Education and training	3,599	1.4%	631,248	8.2%
Public service subjects	9,344	3.6%	361,545	4.7%
Communications	360	0.1%	28,446	0.4%
Quarries, mines, etc.	654	0.3%	17,172	0.2%
Petrochemical	138	0.1%	122,003	1.6%
Religious	5,848	2.3%	62,713	0.8%
Health and medical	2,999	1.2%	240,745	3.1%
Other	17,325	6.7%	192,892	2.5%
Care facilities	3,057	1.2%	135,534	1.8%
Advertising	1,385	0.5%	13,009	0.2%
Statutory undertaking	1,336	0.5%	1,060,442	13.8%
All Non-Domestic Properties	259,680	100.0%	7,693,240	100.0%

Please note, the number of properties includes properties with a zero rateable value.

Source: Scottish Assessors Valuation Roll

Chart 2.10 provides a breakdown of properties on the valuation roll by local authority and RV band: up to and including £20,000; between £20,001 and up to and including £51,000; and above £51,000. These RV bands were significant in 2024-25 as £20,000 in RV was the cut-off for properties to be eligible for the Small Business Bonus Scheme (SBBS) (see Chapter 2.3.6) as well as the RV threshold where the 2023 Revaluation Transitional Relief cap changed; and £51,000 was the threshold above which the Intermediate Property Rate was applied. The accompanying table in the associated Excel file also provides separate figures for those in the RV bands: between £51,001 and up to and including £100,000; and above £100,000 (£100,000 being the threshold above which the Higher Property Rate was applied) (see Chapter 2.3.4).

Across Scotland, 81 per cent of non-domestic properties had an RV of up to £20,000. Ten per cent had a RV between £20,001 and up to and including £51,000. Nine per cent had a RV higher than £51,000, of which four per cent had an RV between £51,001 and £100,000 and five per cent had an RV above £100,000. The number of properties with a rateable value above £100,000 by local authority is provided alongside the data for Chart 2.10 in the associated Excel file.

Chart 2.10: Proportion of NDR Properties at 1 April 2024 by Local Authority and Rateable Value Band

Please note the following:

The number of properties includes properties with a zero rateable value.

Percentages for all bands by local authority are available in the Chart 2.10 tab of the associated Excel file.

Source: Scottish Assessors Valuation Roll

2.3.4 NDR Bills

NDR bills are calculated using the RV of the property, multiplied by the tax rate set nationally and annually by Scottish Ministers, less any relief or exemption entitlement.

(NDR Bill) Property = (RV) Property x (Tax Rate) National – (Reliefs) Property[9]

The tax rate depends on the RV band into which the property falls. The rates and RV thresholds are set nationally by the Scottish Government, and for the financial year 2024-25 the Basic Property Rate (BPR) was set at 49.8p for every £1 of rateable value. Properties with a rateable value greater than £51,000 and less than or equal to £100,000 were liable for the Intermediate Property Rate (IPR) of 54.5p for every £1 of rateable value, and those with a rateable value above £100,000 were liable for the Higher Property Rate (HPR) of 55.9p per £1 of rateable value. Table 2.16 sets the rates and corresponding RV thresholds in each year since 2020-21.

As NDR bills in Scotland are directly related to the RV of individual non-domestic properties, changes in the total RV occurring within a revaluation cycle i.e. between revaluation years, impact on the amount of NDR available for collection, subject to rates and reliefs, as shown in Table 2.16. The version of Table 2.16 in the associated Excel workbook also shows years prior to 2020-21. Changes in total RV are due to the net impact of several factors, including increases in the tax base from new properties or extensions of existing properties; and decreases as demolished properties are deleted from the valuation roll, or as the RV is reduced as a result of appeals. More information and statistics on revaluation appeals are available in NDR Revaluation Appeals Statistics. The increase in RV between 2022-23 and 2023-24 will mainly be as a result of the revaluation.

Historically, inflation was a key driver of growth in NDRI, as changes in the BPR (or poundage as referred to in earlier years) had previously typically been tied to either the Retail Price Index (RPI) or the Consumer Price Index (CPI). However, in recent years this has not been the case; for 2019-20 Scottish Ministers set the BPR at 49.0p, a below-inflation increase from the year before, and for 2020-21 the rate was again increased by less than inflation, to 49.8p, although the increase was completely offset by a 1.6% universal relief which was automatically applied to all properties, as a response to the Covid-19 pandemic, effectively delivering a rate freeze for that year. For 2021-22 the rate was reduced to 49.0p, the same as in 2019-20, and in 2022-23 it was set at 49.8p, again a below-inflation increase compared to the year before. Following the 2023 revaluation, the BPR was kept at 49.8p, and was frozen again in 2024-25.

Some properties may receive reliefs or exemptions, which can reduce or completely remove their NDR liability. These are further discussed in Chapter 2.3.6.

Table 2.16: NDR Income, Total Rateable Value and Rates from 2020-21 to 2024-25

Category	2020-21	2021-22	2022-23	2023-24	2024-25
NDRI, £ millions	1,816	2,108	2,792	3,033	3,146
Total Rateable Value at 1 April, £ millions	7,386	7,325	7,296	7,697	7,693
Basic Property Rate, pence	49.8	49.0	49.8	49.8	49.8
Intermediate Property Rate (IPR), pence	51.1	50.3	51.1	51.1	54.5
IPR threshold, £	51,000	51,000	51,000	51,000	51,000
LBS / Higher Property Rate (HPR), pence	52.4	51.6	52.4	52.4	55.9
LBS / HPR threshold, £	95,000	95,000	95,000	100,000	100,000

Please note the following:

NNDRI figures are contributable income and, as such, reflect the final, audited income figures collected by local authorities, except for 2022-23, 2023-24, and 2024-2025 which are the notified (provisional outturn) figures as the audits are not yet finalised for all councils. They are net of reliefs paid by Scottish Government, but gross of all local reliefs and top-ups to discretionary amounts paid by councils themselves.

Source: NDRI Audited Returns, NDRI Notified Returns, and Scottish Assessors Valuation Roll

2.3.5 Rates Retention Schemes

The policy initiatives that directly link to the amount of NDR collected are: the Non-domestic Rates Incentivisation Scheme (NDRIS), Tax Incremental Financing (TIF), and Green Freeports.

NDRIS (formerly the Business Rates Incentivisation Scheme, BRIS) was introduced from April 2012 to incentivise local authorities to maximise existing NDRI and attract new economic growth. It allows all local authorities that exceed their annual NDR buoyancy target, the target percentage increase in their tax base, to benefit from receiving additional grant, equal to 50 per cent of any additional NDR income. In effect, this means that only 50 per cent of the additional NDR income attributable to the increased buoyancy is deducted from the GRG.

This increased funding is carried forward between revaluation years, with each year’s increased funding being carried forward to the next year and added to any new retention awarded, assuming the previous year’s income is maintained. In 2021-22, the total amount of additional funding received under this scheme was £1.6 million (relating to 2019-20 payment amounts). The BRIS scheme was suspended for the period 2020-21 to 2022-23, as reliefs introduced during the Covid-19 pandemic significantly decreased NDRI in all local authorities. It was re-introduced in 2023-24 following the 2023 revaluation. Local authorities collectively retained a total of £4.3 million NDRI through the scheme in 2024-2025 (relating to 2023-24 payments).

The Scottish Government is also piloting TIF which allows local authorities to fund public sector infrastructure, which unlocks private sector investment, contributing to sustainable and inclusive economic growth. This growth is funded from future incremental NDRI that is expected to be generated as a result of attracting more businesses into the area thanks to the upfront public sector enabling investment.

TIF is currently being piloted through secondary legislation under existing provisions of the Local Government Finance Act 1992 in four local authorities: Argyll & Bute, Falkirk, Fife and Glasgow. Of these four pilots, Argyll and Bute, Falkirk and Fife reported TIF income in 2023-24. They collectively retained a total of £4.4 million NDRI in 2024-2025.

Two Green Freeports – Forth Green Freeport, and Inverness and Cromarty Firth Green Freeport – were announced in January 2023, and will enable local councils to retain additional non-domestic rates income resulting from new or expanded properties in the designated areas.

No funds were retained under the Green Freeports scheme in 2024-25.

2.3.6 NDR Reliefs

There are a number of types of NDR relief that reduce the NDR bill for properties receiving it. More information on NDR reliefs in 2024-25 can be found in Finance Circular 5/2024.

Table 2.17 shows the amount of relief provided for the main types of relief available for each year between 2020-21 and 2024-25. Local reliefs and the elements of discretionary reliefs funded by local authorities are not included.

The gross amount of relief funded by the Scottish Government has increased from £721.7 million in 2023-24 to £724.5 million in 2024-25.

2023 Revaluation Transitional Relief caps increases in gross NDR bills compared to those before the latest revaluation. It is awarded automatically to all properties, and in 2024-25 had a total value of £12.9 million. For 2024-25, increases compared to the gross bills before the 2023 revaluation were limited to 40.6% for properties with a rateable value up to £20,000; 87.5% for properties with rateable values between £20,001 and £100,000, and 140.6% for those with rateable values above £100,000.

The Small Business Transitional Relief (SBTR) awarded in 2024-25 capped the increase in net bills if, following the 2023 revaluation, properties:

• were no longer eligible for SBBS relief, or
• saw a reduction in eligibility for SBBS relief, or
• were no longer eligible for mandatory Rural relief.

In 2024-25, SBTR capped the increase in net bills at £1,200 compared to their net bill before the 2023 revaluation, and in total reduced NDR bills by £19.4 million.

Table 2.17: Amount of NDR Relief Provided from 2020-21 to 2024-25 by Relief Type, £ thousands

Relief Type	2020-21	2021-22	2022-23	2023-24	2024-25
Empty Property Relief	78,670	88,070	95,471	n/a	n/a
Charity Relief	223,189	214,028	215,900	231,026	247,225
Sports Club Relief	14,783	13,140	14,717	16,082	16,763
Disabled Rates Relief	64,266	63,810	63,459	68,300	72,363
Small Business Bonus Scheme	279,441	271,176	281,542	231,150	250,548
Religious Exemptions	27,402	27,481	27,812	29,632	30,446
Rural Relief	3,822	3,775	3,888	3,531	3,533
Renewable Energy Relief	6,439	8,010	8,062	8,500	10,155
New Start Relief	n/a	n/a	n/a	n/a	n/a
Fresh Start Relief	2,321	4,086	5,970	4,653	8,578
Revaluation Transitional Relief	36	13	169	68,278	12,923
Day Nursery Relief	9,601	9,762	10,095	9,836	11,431
Business Growth Accelerator (BGA) - Unoccupied New Build	2,973	2,304	1,905	3,775	990
BGA - New Occupied and Improved	10,519	12,978	22,416	21,161	27,237
Retail, Hospitality, Leisure (and Aviation) Relief	941,229	640,501	27,715	n/a	n/a
Small Business Transitional Relief	n/a	n/a	n/a	21,740	19,414
Parks Transitional Relief	n/a	n/a	n/a	1,502	877
Islands Hospitality Relief	n/a	n/a	n/a	n/a	4,817
1.6% Universal Relief	60,062	n/a	n/a	n/a	n/a
Other	1,609	1,568	2,276	2,490	7,189
Total Relief Provided	1,726,363	1,360,702	781,398	721,657	724,488

Please note the following:

Figures include mandatory and discretionary elements of relief where applicable, but exclude backdated relief payments and councils own contributions to reliefs.

‘Other’ includes Hardship Relief, Enterprise Areas Relief, District Heating Relief, Mobile Mast Relief, New Fibre Relief and Lighthouse Relief.

Empty Property Relief was devolved to councils and became a local relief from April 2023.

Retail Hospitality, Leisure and Aviation Relief was introduced in 2020-21. It continued in 2021-22 and became Retail, Hospitality and Leisure Relief in 2022-23.

Revaluation Transitional Relief includes both 2017 Transitional Reliefs and 2023 Revaluation Transitional Relief.

“n/a” is used for years prior to a relief being introduced or after a relief is discontinued.

Source: NDRI Audited Returns for all years expect for 2022-23, 2023-24 and 2024-25 which are from Notified (provisional outturn) returns

Chart 2.11 shows the values of reliefs awarded during 2024-25. The SBBS, Disabled Rates Relief, Religious Exemptions and Charity Reliefs together accounted for £600 million, or around 83 per cent of the total amount of reliefs awarded.

Chart 2.11: Value of NDR Reliefs in 2024-25, £ millions

Please note the following:

NDR reliefs reflect the notified income figures collected by local authorities, because the final, audited income figures are not yet available.

‘Other’ includes: Sports Club Relief, Rural Relief, Renewable Energy Relief, Fresh Start Relief, Revaluation Transitional Relief, Day Nursery Relief, BGA - Unoccupied New Build, Hardship Relief, Enterprise Areas, District Heating Relief, Mobile Mast Relief, New Fibre Relief and Lighthouse Relief.

The table makes use of following acronym: 'SBBS' is Small Business Bonus Scheme

Source: NDRI Notified Returns

2.4 Surplus / Deficit to be met from Reserves

A surplus (-) occurs when a local authority’s revenue expenditure is lower than the amount of service income and general funding available to them. A surplus is added to a local authority’s reserves and carried forward to the next year.

A deficit (+) occurs when a local authority’s revenue expenditure is higher than the amount of service income and general funding available to them. Any deficit must be met from a local authority’s reserves.

The HRA reserve is not permitted to show a deficit at the end of the financial year and if this occurs, local authorities are required to transfer funds from the General Fund to cover this deficit.

Table 2.18 sets out the movement in the General Fund and HRA reserves in 2024-25. At 1 April 2024, local authorities held a total of £3,382 million in their General Fund (including Harbour) and HRA reserves. In year:

• local authorities’ income exceeded their revenue expenditure, resulting in a deficit of £318 million.
• local authorities transferred a total of net £2 million into the General Fund and HRA.
• local authorities’ International Financial Reporting Standard (IFRS) 9 unrealised gains was negligible. IFRS 9 unrealised gains relate to the difference between the fair value of investments compared with their original cost. As the underlying investments have not yet been sold, the net gain is ‘unrealised’ and so is excluded from the revenue reserves balance as this gain is not available to fund future expenditure.

Table 2.18: Movement in Reserves in 2024-25, £ millions

Movement	General Fund	HRA	Total
Balance as at 1 April 2024	3,196	186	3,382
Add: Surplus (+) or Deficit (-) on provision of services after statutory adjustments	-319	1	-318
Add: Net movements in (+) or out (-) due to transfers between reserves	7	-5	2
Less: Increase (+) or decrease (-) in IFRS 9 unrealised gains	1	0	1
Balance as at 31 March 2024	2,883	182	3,065

Please note that balance figures exclude amounts relating to unrealised gains that have been included in revenue reserves applying under IFRS 9: Financial Instruments.

Source: LFR 23

This meant that, overall, the General Fund and HRA decreased by £317 million in year, giving a total balance of £3,065 million at 31 March 2025. More information on local authorities’ reserves is provided in Chapter 4.1.