The Scottish Budget 2022/23

Finance Secretary Kate Forbes presented the Scottish Budget to Holyrood on 9 December 2021 – these are the key points.

Finance Secretary Kate Forbes presented the Scottish Budget to Holyrood on 9 December 2021

The Finance Secretary presented the Scottish Budget to Holyrood on 9 December 2021. Growing uncertainty around the pandemic meant this was a Budget of difficult choices that remained some way from feeling like business as usual. Kate Forbes unwrapped a package of public investment aimed at forecasting what level of support Scotland’s economy will need next year to recover. Rising inflation, challenging business conditions and issues around climate were all front of mind in a transitional Budget which offered some early stocking fillers for businesses. Whilst strictly governing as a minority administration, the Bute House Agreement (a shared policy programme with the Scottish Green Party) means that the Government’s Budget is likely to pass in its current form. This article summarises the key announcements.

Key tax measures for individuals

Income tax

There are no changes to the starter, basic, intermediate, higher and top rates of Scottish income tax. The thresholds from which the basic and intermediate rates of tax apply will increase in line with Consumer Price Index inflation.

Subject to certain exceptions, Scottish taxpayers are entitled to a tax-free personal allowance set by the UK Parliament. The standard personal allowance for 2022/23 is expected to remain frozen at £12,570.

On that basis, for individuals who are entitled to a full standard personal allowance (specific individuals’ personal allowances may be larger or smaller than this depending on their personal circumstances), the rates and bands that will apply to relevant income of Scottish taxpayers for 2022/23 are set out below:


Range of income subject to Scottish rates 



Above £12,570 to £14,732



Above £14,732 to £25,688



Above £25,688 to £43,662



Above £43,662 to £150,000



Above £150,000



* The personal allowance tapers down by £1 for every £2 of taxable income above £100,000.

Land and Buildings Transaction Tax (LBTT) – residential property

The applicable bands and rates of LBTT will remain unchanged from 1 April 2022 as follows:

Band of consideration


Up to £145,000


Above £145,000 to £250,000


Above £250,000 to £325,000


Above £325,00 to £750,000


Above £750,000



First time buyer relief, which increases the effective nil rate band to £175,000, will remain in place.

Additional Dwelling Supplement (ADS), which applies to relevant transactions above £40,000, will stay at four percent.

A call for evidence on reviewing operational aspects of the ADS was announced. This was published on 16 December.

Key tax measures for businesses

Non-domestic (business) rates

From 1 April 2022 non-domestic rates will be as follows:

Basic Property Rate (‘poundage’)


Intermediate Property Rate (rateable values between £51,001 and £95,000)


Higher Property Rate (rateable value above £95,000)



Relief for retail, hospitality and leisure businesses will continue at 50 percent for the first three months of 2022/23, capped at £27,500 per ratepayer.

Business Growth Accelerator relief, which provides 100 percent relief for new builds for up to 12 months following their first occupation and no rates increases for 12 months following a qualifying property improvement, will be expanded to include solar panel installation as a qualifying improvement.

The Budget will also maintain the reliefs which are set annually, including the Small Business Bonus Scheme relief, and Transitional Relief, which caps annual rates bill increases at 12.5 percent for Aberdeen City and Aberdeenshire offices and for all but the very largest hospitality properties across Scotland.

Land and Buildings Transaction Tax – non-residential property

LBTT rates and bands will remain unchanged for non-residential conveyances, as set out below:

Band of consideration 


Up to £150,000


Above £150,000 to £250,000


Above £250,000



The rates and bands that apply to non-residential leases will also remain unchanged:

Net present value of rent payable


Up to £150,000


Above £150,000 to £2,000,000


Above £2,000,000



Local taxation

Local councils will be able to set the Council Tax rates applicable to their local authority areas for 2022/23, and a Citizens’ Assembly on local government funding – including Council Tax – will be established within the term of the current Parliament.

Legislation will be brought forward to allow local authorities to set a Workplace Parking Levy should they choose to do so.

Proposals for a Transient Visitor Levy will be revisited.

Environmental taxes

The standard and lower rates of Scottish Landfill Tax (SLfT) from 1 April 2022 will maintain alignment with corresponding taxes in other parts of the UK:

Materials sent to landfill

Proposed rates from 1 April 2022 

Standard rate

£98.60 per tonne

Lower rate

£3.15 per tonne

The tax credit for contributions to the Scottish Landfill Communities Fund will remain capped at 5.6 percent of an operator’s total SLfT liability.