ACCA – Scottish Budget for 2025/26

We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA

The Budget sets out the Scottish government’s proposed spending and tax plans

The Scottish Budget 2025/26 was unveiled by the Scottish Government on 4^th December, alongside a new Scottish Tax Strategy.

The Finance Secretary highlighted the ongoing challenges to public finances, not least owing to the impact of the recent announcement of increases to Employers’ NICs on the public sector wage bill. Overall, the government responded to concerns of the business community by committing to broadly maintain current income tax rates until the end of the current parliament (May 2026) while focusing available spending on measures to tackle child poverty, such as announcing plans to amend benefit payments in Scotland to mitigate the ‘two child cap’ on child benefit.

There will be no new bands for Scottish income tax for the remainder of the parliamentary session. The thresholds for basic and intermediate bands will be uprated while the thresholds for other bands remain unchanged. See table:

**Those earning more than £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000.

Rates and bands for Land and Buildings Transactions Tax (LBTT) will remain unchanged, though the Additional Dwelling Supplement will increase from 6% to 8% from 5 December 2024. The Scottish Government also announced that it will undertake a review of LBTT, commencing in spring 2025.

On non-domestic rates, the basic poundage rate remains frozen for 2025-26, while the intermediate and higher property rates will increase in line with inflation. Most existing reliefs will remain, with 40% rates relief for hospitality premises within the basic property rate. See table: