Scottish Budget 2024-25

With an estimated £1.5bn gap in the Government’s finances to fill, Shona Robison, Scotland’s Finance Secretary and Deputy First Minister, was tasked with putting together one of the most challenging budgets for the nation since devolution.

How the 2024-25 Scottish Budget affects your business

Below is an overview of the taxation and spending plans relevant to business owners and entrepreneurs across Scotland.

Income tax

New advanced rate tax band announced

The Scottish Government will introduce a new income tax band, for individuals with taxable income between £75,001 and £125,140. The newly formed advanced rate will be set at 45%.

The higher rate band will still begin at £43,663, with the tax rate frozen for 2024-25.

Starter and basic rate tax bands to rise with inflation

The starter and basic rate income tax bands will rise with inflation in 2024-25:

• The starter rate (19%) band will be £12,571-14,876
• The basic rate (20%) band will be £14,877-£26,561

Top rate tax band lifted from 47% to 48%

The Scottish Government’s plan to get those with the deepest pockets to pay more extends to a 1p rise on the top rate income tax band. This will rise from 47% to 48% in April 2024.

The top rate income tax threshold will kick in for anyone earning above £125,140 per annum.

Scottish income tax 2024/25 at a glance

Taxable Income	Band	Tax Rate
Over £12,571 to £14,876	Starter Rate	19%
Over £14,877 to £26,561	Basic Rate	20%
Over £26,562 to £43,662	Intermediate Rate	21%
Over £43,663 to £75,000	Higher Rate	42%
Over £75,001 to £125,140	Advance Rate	45%
Above £125,140	Top Rate	48%

Income tax receipts to rise £1.5bn year-on-year

The Scottish Fiscal Commission supplied tax and social security forecasts for the 2024-25 fiscal year. The latest forecasts show a significant improvement in Scotland’s tax performance, driven by higher earnings growth.

The Scottish income tax receipts forecast is now expected to rise £1.5 billion year-on-year in 2024-25.

Poundage frozen on basic property rate

Business owners with premises valued at less than £51,000 will see their business rates poundage frozen across Scotland.

Ms Robison added that Scotland’s businesses would save a combined £37m owing to the freeze, compared to rates which had risen by the current level of inflation.

Small Business Bonus Scheme maintained

Ms Robison also revealed that the Small Business Bonus Scheme would continue into 2024-25, with the Government set to determine how valuations for business rates will be carried out.

Latest official statistics show that the Small Business Bonus Scheme has already helped 123,010 properties out of business rates altogether.

Island-based hospitality businesses given 100% rate relief

In recognition of the unique challenges faced by the hospitality sector – particularly within Scotland’s island communities – 100% business rate relief will be given to hospitality firms across all islands, capped at £110,000 per business.

Keep up to date with future announcements

You can also get further detail on the Scottish Government’s proposals here.

Stay up to date with the latest Government announcements affecting you and your business by signing up to our newsletter here.  

 

Date published 19 Dec 2023 | Last updated 19 Dec 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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