The Scottish Budget Update
The Deputy First Minister, John Swinney, has set out the 2023/24 Scottish Budget and tax plans.
We’ve outlined 3 key takeaways of how this affects businesses below:
Income tax
The 2023/24 income tax bands will remain the same as for 2022/23, except for the top rate threshold which will fall from £150,000 to £125,140, in line with the reduction for the rest of the UK announced in the Autumn Statement. This means taxpayers will pay income tax at the top rate from April 2023, once their income goes above £125,140.
The higher and top rates will both increase by 1% in 2023/24 to 42% and 47% respectively.
The proposed changes to the income tax rates and bands for 2023-24 are as follows:
| Band | Income Threshold | Tax Rate |
| Starter Rate | £12,571 - £14,732 | 19% |
| Basic Rate | £14,733 - £25,688 | 20% |
| Intermediate Rate | £25,689 - £43,662 | 21% |
| Higher Rate | £43,663 - £125,140* | 42% |
| Top Rate | Over £125,141* | 47% |
Land and Buildings Transaction Tax (LBTT) on second homes rises
The Scottish Government has confirmed there will be no alterations to LBTT main residential and non-residential rates and bands.
However, the Additional Dwelling Supplement – paid on the purchase of additional residential properties in Scotland with a minimum value of £40,000 – has been uplifted from 4% to 6%. This will directly impact landlords with growing portfolios.
The First‑Time Buyer Relief will continue to be available.
Business rates
From April 2023 new rateable values will be introduced, based on property values as at 1 April 2022. The poundage will be frozen at 2022/23 levels in an effort to proetct businesses.
The small business bonus scheme (SBBS) relief will be reformed and eligibility extended. 100% relief will be available for properties with a rateable value of up to £12,000 and the upper rateable value for individual properties to qualify for SBBS relief will be extended from £18,000 to £20,000.
SBBS relief will taper from:
- 100% to 25% for properties with rateable values between £12,001 to £15,000; and
- 25% to 0% for properties with rateable values between £15,001 to £20,000.
- £600 in 2023/24;
- £1,200 in 2024/25; and
- £1,800 in 2025/26.
Cumulative rules will remain in place including the £35,000 cumulative rateable value threshold. Car parks, car spaces, advertisements and betting shops will be excluded from eligibility for SBBS from 1 April 2023.
A phased small business transitional relief will be introduced for properties that lose SBBS or rural rates relief. For those losing or seeing a reduction in these reliefs on 1 April 2023 (including due to the above exclusions introduced for SBBS relief) the maximum increase in the rates liability relative to 31 March 2023 will be capped at:
