The Scottish Budget 2020/21

BLOG11th Feb 2020

The Scottish budget for 2020/21 has been delivered, but what does it mean for the Scottish taxpayer? 

Scottish Income Tax 

This budget makes no changes to Income Tax rates and does not introduce or remove any bands. These rates apply to non-savings income such as employment, pension or rental income for those who live in Scotland. The rates and bands for 2020-21 are as follows: 

Band  Band name  Rate 
£12,501*  £14,585  Starter Rate  19% 
£14,586  £25,158  Scottish Basic Rate  20% 
£25,159  £43,430  Intermediate Rate  21% 
£43,431  £150,000**  Higher Rate  41% 
Above £150,000**  Top Rate  46% 


*Assumes individuals are in receipt of the Standard UK Personal Allowance.

Although the tax rates have gone unchanged, the Higher Rate threshold is frozen from the 2019/20 tax year at £43,430 as is the Top Rate at £150,000. So, those with increases in their income during the year may find there is less in their pocket after tax than they may have anticipated.  The other thresholds have risen in line with inflation. 


Land and Buildings Transaction Tax (LBTT) 

From 7 February 2020 the rates of LBTT for non-residential leases will change.  

For any lease with an effective date on or after 7 February 2020, a new 2% LBTT band will apply to the amount of any rental net present value (NPV) exceeding £2m. This represents a significant increase in the LBTT bill for commercial tenants compared to the old rates. 

It also means that leases of Scottish commercial property will bear a higher tax cost than equivalent leases entered into in England and Northern Ireland where the higher rate kicks in at £5m. 


Other Taxes 

Further expected changes did not materialise with no movement on Additional Dwelling Supplement, Air Departure Tax, Aggregates Levy or VAT Assignment. The Scottish Landfill Tax is due to increase to ensure consistency with charges in the rest of the UK. In addition, a number of changes were announced to Non-Domestic Business rates including the extension of the relief for Enterprise Areas and an amendment to Empty Property Relief.   

Find out more about our Private Client Tax team.


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