Ahead of this week’s announcement, Deputy First Minister and Finance Secretary Shona Robison said it would be one of the ‘most challenging’ Budgets there has been since the creation of the Scottish Parliament in 1999, amid high inflation and a £1.5 billion black hole.

As she delivered her first ever Budget, she carried on to say that Scotland is at the ‘upper limit of mitigation’ of UK Government policies.

She added that although it would always do the best it could with the powers available, there is “no substitute for independence” as the UK Government’s block grant had fallen in real terms by 1.2% since 2022/23

Despite this, Shona Robison set out the government’s spending plans for the next year.

The biggest take away for those that are self-employed seemed to be the creation of a new tax threshold in Scotland for high earners. Anyone in Scotland who earns more than £75,000 will now pay a rate of 45%.

Scotland already had the highest tax band in the UK at 47% for people earning more than £125,000, which will now rise by 1% next year to 48%.

The new rate takes the number of income tax bands in Scotland to six, while the rest of the UK has three. If we compare this to income tax payers elsewhere across the country, it works out to be a significantly higher payment.

If you earn more than £100,000, you will now pay £3,346 more, and anyone who makes more than £28,850 will pay higher taxes than workers elsewhere in Britain.

What other key points can we take from her speech?

New 45% Tax Band

–        As mentioned above, this has been created for those earning between £75,000 and £125,140.

–        The top rate of tax against those earning more than £125,000 will also rise by 1% next year to 48%.

–        Starter, basic and intermediate rates frozen at 19%, 20% and 21%.

–        £43,663 threshold for higher band frozen instead of rising with inflation.

Business and economy

–        A big positive for small business owners in Scotland is that business premises valued below £51,000 will have their rates frozen.

–        Hospitality businesses on the Scottish islands will be given 100% rates relief – up to the value of £110,000 too.

Health and social care

–        Great news for healthcare in Scotland as NHS boards will receive a 4.3% funding rise, an additional £550m in the next year.

–        The Deputy First Minister said this would help the NHS “evolve its delivery of services and work to improve waiting times”.

–        The health service budget will amount to £13.2bn as part of an “above real terms” rise.

–        Social care, early learning and childcare workers in the private, third and independent sectors will receive a wage rise to at least £12 per hour from April 2024.

Arts and culture

–        If you work in the arts, you’ll be pleased to hear that arts and culture funding will increase by £15.8m over the next year.

–        The Scottish government committed to investing an additional £100m in the sector by 2028-29.

Public services

–        More money will be allocated to help the public service sector.

–        The Scottish Police Authority resource budget will increase by £75.7m.

–        Capital funding for Police Scotland to improve estate, fleet and technology will rise to £64.5m.

–        Scottish Fire and Rescue Service will receive an additional £13.5m for resource spending and extra funding of £10.3m to improve facilities.

–        The Scottish Prison Service funding will rise by 10% to £38.6m and £176m has been set aside to modernise the prison estate too.

Council tax freeze is here to stay

–        The government will “fully fund” a council tax freeze.

–        Councils will be given £144m worth of extra funding, equivalent to an above-inflation 5% rise.

–        Some experts claim that the Scottish Government “would have lifted 10,000 more children out of poverty” if they had used the money set aside for the council tax freeze to hike the Scottish Child Payment instead.

Child poverty

–        The Scottish Child Payment will rise to £26.70 from next April – up from £25 per week.

–        To be eligible for Scottish Child Payment, you must:

o   Live in Scotland

o   Be responsible for one or more children under the age of 16

o   Be in receipt of one of the following: Universal Credit, Pension Credit, Child Tax Credit, Working Tax Credit, income-related Employment and Support Allowance, income-based Jobseeker’s Allowance, or Income Support.

–        Councils will be given £1.5m to eliminate school meal debt for pupils across the country. This will help to wipe off any students’ outstanding lunch payments.

–        If a child is in receipt of free school means, this will continue for primary 1 – 5 schoolchildren, and there will be an extra £43m invested to extend the programme to those in primary 6 and 7.

The Social Contract

Robison said the “social contract” with the people of Scotland was at the heart of a Budget. Speaking this week during the announcement, she said the Budget “reflects our shared values as a nation and speaks to the kind of Scotland we want to be”.

She carried on to claim that the Scottish government is committed to equality through tackling poverty and protecting people from harm, offering those that need it an extra helping hand by targeting them with additional support.

One area where the Scottish Government has received criticism post-Budget from opposition parties is where they have made cuts to the housing budget, with spending set to fall by more than £200 million for the next financial year.

The total amount spent will go down from £738.3m in 2023/24 to £533.2m in 2024/25.

How Gorilla Accounting Can Help You

As the UK’s most trusted accountants, we can help you make sense of the Scottish Budget if it affects you and how it could impact your business. Our accountants are on-hand to answer any queries you have regarding the Budget, your business accounting, tax optmisation, compliance and much more.

If you need an accountant that you can trust, Gorilla Accounting are specialists in your field. For expert advice, speak to an accountant on 0330 024 0406 or request a call back.