On Thursday 31 January 2019, the Scottish Budget passed Stage 1 of the ‘Scrutiny’ process. As the Scottish National Party (SNP) runs a minority administration in Scotland, there was always going to be the need for one of the other parties to give their backing to it. As for the last 2 years, this support came from the Scottish Greens. And, as previously, this meant that there were concessions by the SNP to ‘win’ the support.

The fact that the Scottish Budget has passed Stage 1 means that it will probably pass Stages 2 and 3 with no problems.  This impacts software developers immediately and employers in both the immediate and longer term:

Scottish Income Tax 2019/20

On 31 January 2019, knowing that a SNP / Green deal was in place, the Scottish Conservatives sought to amend Derek Mackay’s Budget ‘Motion’ by inserting the following at the end in the form of Motion 15625.1:

‘but, in so doing, regrets that the income tax gap between Scotland and the rest of the UK will widen as a result.’

This amendment was unsuccessful with 30 votes for (all Scottish Conservatives) and 96 against (everyone else).

Scottish Motion 15625 proposed by Derek Mackay, Cabinet Secretary for Finance, Economy and Fair Work asked:

‘That the Parliament agrees to the general principles of the Budget (Scotland) (No.3) Bill’

With the Scottish Greens on side, this was approved by 67 votes to 58 with one MSP abstaining and the Motion was approved.

Whilst we do not have the all-important Scottish Rate Resolution in legislation that will actually set the rates and thresholds for Scottish Taxpayers in legislation, software developers, employers and individuals can be pretty certain that it will reflect the Draft Budget proposals outlined in December 2018.  These are shown below with 2018/19’s figures shown for comparison:

Band Rate 2018/19 2019/20
% £ £
Scottish Starter 19 1 – 2,000 1 – 2,049
Scottish Basic 20 2,001 – 12,150 2,050 – 12,444
Scottish Intermediate 21 12,151 – 31,580 12,445 – 30,930
Scottish Higher 41 31,581 – 150,000 30,931 – 150,000
Scottish Top 46 Over 150,000 Over 150,000


Coupled with the above and the value of the UK-wide Personal Allowance (£12,500), the following is a much clearer table of the Income Tax ‘bracket’ that Scottish Taxpayers will fall into:

Band Rate 2018/19 2019/20
% £ £
Scottish Starter 19 11,851 – 13,850 12,501 – 14,549
Scottish Basic 20 13,851 – 24,000 14,550 – 24,944
Scottish Intermediate 21 24,001 – 43,430 24,945 – 43,430
Scottish Higher 41 43,431 – 150,000 43,431 – 150,000
Scottish Top 46 Over 150,000 Over 150,000


Effectively, the increase in the UK-wide Personal Allowance has not been passed on to Scottish Taxpayers paying Income Tax at the Higher and Top rates.

Note that the Resolution is due 19 February 2019 so keep an eye out for activity in Holyrood on this day.

The SNP’s Concessions

No deal was ever going to be made without concessions from the SNP to the Green’s wishes.  This is not quite a case of bending over backwards, more a political way of tailoring things so that the Budget got the necessary approval to pass through.

The concessions are quite interesting to note and the Green’s aims over the last 3 years have been to secure more funds for Local Government and services.  This year’s concessions are wider and could impact employers as well:

Teacher’s Pay

The Deal includes a commitment from the Scottish Government to fund teachers’ pay settlements from national resources rather than council ones.

Reforming or Replacing the Council Tax

The SNP have agreed to cross-party talks on replacing the council tax.  This is a step short from the Green’s wish for a type of residential property tax.  If an agreement can be reached, Mr Mackay has indicated that legislation could be laid before the end of the current Parliamentary term in 2021 for the new administration to take forward.

Increased Spending for Public Services

The Green Deal secures circa £200 million of increased funds for councils to provide services (schools, parks, social care etc).  This is on top of the spending increase already proposed in the Draft Budget.

To partly fund this, Mr Mackay says local councils will be able to increase the cap on individual Council Tax bills from 3% to 4.79%.

Reducing Plastic

The price of a single-use carrier bag will increase from 5p to 10p.  This is in line with recent announcements for England.  The SNP have also agreed, in principle, to a charge on disposable plastic cups with a legislation proposal to be published later in 2019.

A Workplace Parking Levy

In an attempt to change individual’s behaviour towards motoring, the Deal could see changes to the Transport (Scotland) Bill that is passing through the Scottish Parliament.  This Bill seeks to make provision things such as low emission zones.

Depending on the local council, this ‘Car Tax’ could see employers who provide a large number of parking spaces having to pay a levy, hopefully, incentivising the take-up of things like cycle-to-work schemes.  Employers will decide whether or not they pass this levy onto their employees, though Mr Mackay has said that hospitals will be exempt.

This is something to watch out for.

A Tourism Tax

The Green Budget Deal also brings a commitment to have a public consultation about the introduction of a tourism tax.  Possibly, this will be levied in places such as hotels so that the additional revenue is available to be used by the councils to fund the extra work involved in maintaining public services – for example refuse collection when tourism is high.  Councils will be able to determine whether or not to introduce it and what rates to charge.

This Deal gives employers a lot more to think about than just Scottish Income Tax for 2019/20.  I think that it is also a good demonstration of the range of powers that the Scottish Government has.


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