First Scottish budget makes use of new tax powers

Derek Mackay, the Cabinet Secretary for Finance and the Constitution, delivered his first Scottish Budget last month – the first in which the Scottish Government makes use of new tax powers devolved under the Scotland Act 2016.

Mackay declared the tax rate (poundage) for 2017-18 will be 46.6 pence (which is the same as in the rest of the UK).

The large business supplement will remain at 2.6 pence (higher than in the rest of the UK). It is also proposed that the threshold will increase, so that the supplement is applicable only for properties with rateable values over £51,000.

There will be no transitional arrangements (transitional relief) to phase in bill rises or falls that result from the 2017 revaluation (stipulated on page 89 of attached draft Scott Budget for 2017/18) – or as an excerpt here:

“Business Rates The Scottish Government remains committed to competitive business rates, underlined by proposals in this Draft Budget in the context of the 2017 revaluation. We propose matching the English poundage, representing a 3.7 per cent drop in the tax rate. We will expand the Small Business Bonus Scheme by significantly raising the eligibility threshold, so that the scheme lifts 100,000 properties out of rates altogether and continues to provide better support for SMEs than elsewhere in the UK. Other rates reliefs will continue, with renewables and rural reliefs being expanded. This improved package of reliefs will mean that over half of rateable properties pay nothing. The large business supplement will continue at the current rate, but will be applied at a higher threshold so that fewer properties (under one in ten) will be affected. We are not proposing transitional arrangements to phase in changes in liability due to the revaluation, as this would benefit a few large utility companies at the expense of smaller ratepayers. Further details are set out in Local Government Finance Circular No. 9/2016, published alongside the Draft Budget, and Assessors’ provisional revaluations are also now available at A separate report on the revaluation will be published in due course. Looking forward, we have committed to respond quickly to the ongoing external review of business rates, led by Ken Barclay, once it concludes in Summer 2017.”.

The thresholds for the Small Business Bonus Scheme will be increased so that there is 100% relief for rateable values up to £15,000, and 25% up to £18,000. This should result in 100,000 properties being exempt from paying rates altogether.