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Scottish Budget 2021/22 – Headlines

The Scottish Finance Secretary, Kate Forbes, outlined plans for Scottish spending and taxation in the 2021/2022 Scottish Budget on 28 January 2021.

The key announcements were as follows:

Tax rates

Reflecting the Secretary’s description of this budget being a time for “stability, certainty and targeted support” there was little change to income tax rates and bands for 2021-22.

  • starter and basic rate bands, as well as the higher rate threshold, will increase by inflation (0.5%). As a result, the Scottish tax payer will pay slightly less income tax in 2021-22 than in 2020-21.
  • the top rate threshold of income tax will be frozen in cash terms at £150,000.

Scottish Income Tax Policy Proposals 2021-22

Band Income Range Rate
Starter Rate Over £12,570 – £14,667 19%
Basic Rate Over £14,667 – £25,296 20%
Intermediate Rate Over £25,296 – £43,662 21%
Higher Rate Over £43,662 – £150,000* 41%
Top Rate Over £150,000** 46%

* Assumes individuals are in receipt of the Standard UK Personal Allowance
** The Top Rate remains at 2020-21 level. Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000

Land and Buildings Transactions Tax (LBTT)
  • during the first lockdown, house buyers received a tax break with the increase in the land and buildings transaction tax starting point increasing to £250,000. This temporary break will end as planned and the starting point for LBTT will revert back to £145,000 on 1 April 2021
  • first-time buyers will continue to be able to claim the first-time buyer relief, which raises the nil-rate band for LBTT to £175,000.
Rates
  • non-domestic rates relief for retail, hospitality, leisure and aviation businesses will be extended by at least another three months
  • the Basic Property Rate, often referred to as ‘poundage’, of non-domestic rates is to be cut to 49p.

The budget sets out the tax and spending plans for the year ahead and these proposals now need votes from opposition parties to pass the measures before being agreed by 9 March 2021.  You can read the full budget statement here on the gov.scot website.

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