Tax changes to wiping out school meal debt – Key points from the Scottish Budget

Deputy First Minister Shona Robison has outlined the Scottish Government’s tax and spending plans.

The Scottish Government has outlined its Budget for the next financial year (Jane Barlow/PA) (PA Archive)

Shona Robison has laid out the Scottish Government’s tax and spending plans for 2024-25.

The Scottish Budget, which came against the backdrop of a £1.5 billion black hole in the Government’s finances, was considered to be one of the most difficult in the near-25-year history of devolution.

Here are some of the key announcements:

– Income tax

The Deputy First Minister – who also serves as the country’s Finance Secretary – announced a new tax rate for those earning between £75,000 and £125,140.

The 45p-in-the-pound rate, she said, would sit alongside a 1% increase to the highest tax band, which will take it to 48% – with both changes impacting the top 5% of Scottish taxpayers.

The basic and intermediate bands will see the rates at which they kick in rise by the rate of inflation, while the highest rates will remain the same.

The Scottish Fiscal Commission (SFC), forecasts the tax changes will bring in £1.5 billion in revenue funding next year alone, although its chair said “tough decisions” are still likely to be necessary in individual Government departments.

– Business rates

The retail sector has long called for help with business rates as the industry deals with the cost-of-living crisis.

Some were given their desired respite on Tuesday, when Ms Robison announced rates would be frozen for premises valued at less than £51,000.

Meanwhile, 100% relief was offered to hospitality businesses on Scotland’s islands.

– Social security

Ahead of the Budget, poverty campaigners had urged ministers to increase the Scottish child payment to £30 per child per week, up from £25, to help the most vulnerable families.

In her statement, Ms Robison said the payment would rise by the rate of inflation to £26.70 per week.

This was despite First Minister Humza Yousaf saying in his SNP leadership campaign he wanted to use his first Budget to increase the payment.

Child Poverty Action Group director John Dickie said the Budget announcement was “bitterly disappointing”.

– School meal debt

Ms Robison confirmed to MSPs what had been reported on Monday, that £1.5 million would be handed to councils to wipe debt accrued by pupils on school meals.

The move, she said, would remove “a worry hanging over families up and down the country who are struggling to make ends meet”.

– Council tax freeze

The big announcement to come out of the SNP conference earlier this year – Mr Yousaf’s first in charge – was the somewhat puzzling decision to freeze council tax.

Until that point, the Scottish Government had been consulting on a policy that could have seen council tax rise by between 7.5% and 22.5% on the most valuable properties.

But on Tuesday, the freeze was confirmed, with Ms Robison putting £140 million into the pockets of local authorities – the equivalent of a 5% council tax rise.

Local government body Cosla has pushed the Scottish Government to ensure the freeze is fully funded, and it remains unclear if it believes the figure provided is adequate.

– The UK Government

Throughout her 30-minute statement, Ms Robison was at pains to attack the UK Government and its autumn statement.

She was keen to draw a dividing line between the governments in Edinburgh and London, pointing out the decision by Chancellor Jeremy Hunt to cut taxes in his autumn statement when she had chosen to raise them to ensure those with the “broadest shoulders” paid more.

Her final comments as she closed her speech were a direct call for Scottish independence.

“Quite simply we cannot spend money that we do not have, and we cannot mitigate every cut made by the UK Government,” Ms Robison said.

“We are at the upper limit of the mitigation that can be provided within the devolved settlement.

“We will always do our best with the powers that we have, but they are simply no substitute for independence.”