28 January 2021

In advance of the UK budget on 3 March 2021, today Scotland announced how they will use their devolved tax powers for the 2021/22 financial year.

With Covid-19 still very much the forefront of everyone’s minds, you may be pleased to hear that this budget shows no drastic changes to the Scottish tax system but does commit to continue to support businesses negatively impacted by the pandemic.

Income Tax

The rates of tax that individuals in Scotland pay will remain the same, along with the top rate threshold, however each of the other bands have increased by a 0.5% rate of inflation as follows:

Band Income range Rate
Starter rate £12,570 – £14,667 19%
Basic rate £14,667 – £25,296 20%
Intermediate rate £25,296 – 43,662 21%
Higher rate £43,662 – £150,000 41%
Top rate Over £150,000 46%

 

Land and Buildings Transaction Tax (LBTT)

The temporary change to the residential LBTT nil rate band introduced as part of the Governments Covid-19 recovery plans will end as planned on 31 March 2021.

From 1 April 2021 the nil rate band will revert back to £145,000 or £175,000 for first time buyers with the additional dwelling supplement remaining at 4%.

Non-Domestic Rates and council tax

It was announced that the 100% Non Domestic Rates relief for the retail, hospitality, leisure and aviation sectors will continue for a period of at least three months (until the end of June 2021).  However, if the UK Government announces an equivalent extension to this then it will be matched in Scotland.  A number of other more specific reliefs will also continue.

The Basic Property Rate (poundage) charge for non domestic rates will be reduced to 49 pence with two additional rates levied on properties with a rateable value of over £51,000 and £95,000 respectively.

The government will also support local councils who wish to freeze their council tax at the 2020/21 levels.

Continued Covid-19 Support

Don’t forget the Scottish government and local authorities are continuing to provide support to individuals and businesses adversely impacted due to Covid-19.  To find out if there is any support available to you please visit the website here https://findbusinesssupport.gov.scot/ or contact your local authority.

Some of the specific funds available are:

  • Strategic Framework Business Fund for business required to close by law
  • Local Authority Discretionary Fund for businesses who have not been eligible for previous business support grants
  • Scottish Wedding Industry Fund

If you have any queries on the Scottish Budget for 2021/22, please do not hesitate to get in touch with your usual Dodd & Co contact.