In summary: Scottish and Welsh 2023 Budgets
By Justine Riccomini, Head of Tax (Employment and Devolved Taxes)
9 January 2024
We explain what changes were announced by the Scottish and Welsh Governments in their 2023 Budget statements.
The Scottish and Welsh Governments made their respective Budget announcements on the same day, 19 December 2023. Yet the differences in both approach and content were very apparent.
The Scottish Deputy First Minister and Cabinet Secretary for Finance, Shona Robison MSP, stood up in the traditional way at Holyrood and read out her Budget announcement. Whereas, the Welsh Senedd published its draft proposals without a live read-out of the proposals by the Minister for Finance and Local Government, Rebecca Evans MS. As a result of these differing methods of communication, one event attracted a lot of attention and the other went virtually unnoticed. The Welsh Budget was published the day after the Senedd had broken up for Christmas recess, so we understand that the Senedd will be debating the Budget announcements early in the new year.
Key announcements in Scotland
Scottish income tax
A new sixth tax rate, to be known as the advanced rate, is to be introduced from 6 April 2024. This rate of 45% will apply to “non-savings, non-dividend” income between £75,000 and £125,140. In addition, the top rate applying to income above £125,140 will be increased by a percentage point to 48%. The starter (19%), basic (20%), intermediate (21%) and higher (42%) percentage rates will remain unchanged. The starter and basic rate thresholds will be increased by inflation to £14,876 and £26,561 respectively, but the higher rate threshold will be frozen at £43,662.
Land and buildings transaction tax (LBTT)
The residential LBTT rates and bands will be maintained at their current level, and first-time buyer relief will continue. The additional dwelling supplement (ADS) will also continue at its current level. It is anticipated that legislation will be introduced in spring 2024 to provide for various amendments to ADS, including extending timelines, as called for by ICAS and other stakeholders. Note that the current non-residential LBTT rates and bands are also remaining at the same levels.
Scottish landfill tax
From 1 April 2024, the standard and lower rates will be increased to £103.70 and £3.30 respectively, to be aligned with UK landfill tax increases. The Scottish Landfill Communities Fund credit rate for 2024–25 is to be maintained as a maximum of 5.6% of an operator's tax liability.
For further information and commentary, please read our article detailing the Scottish Budget announcements.
Key announcements in Wales
Wales’ draft Budget publication included the following tax announcements:
Welsh income tax
The Welsh income tax rate will remain at 10%, which means that the same three rates and bands will continue to apply as in England and Northern Ireland. Note that Wales doesn’t have powers over the income tax bands – only the rates – but it has once again chosen not to change the status quo.
Land transaction tax
No further changes are proposed at this time in terms of land transaction tax.
Welsh landfill tax
As with Scotland, the landfill disposals tax rates will increase in line with RPI inflation with effect from 1 April 2024, again aligning with that of the UK government. The standard rate will be £103.70, the lower rate £3.30, and the unauthorised disposals rate will be £155.55.
If there are any difficulties or anomalies with aspects of Scottish or Welsh taxation that you wish to bring to the Tax Team’s attention, please contact Justine Riccomini.
