ICAS ICAS logo

Quicklinks

  1. About Us

    Find out about who we are and what we do here at ICAS.

  2. Find a CA

    Search our directory of individual CAs and Member organisations by name, location and professional criteria.

  3. CA Magazine

    View the latest issues of the dedicated magazine for ICAS Chartered Accountants.

  4. Contact Us

    Get in touch with ICAS by phone, email or post, with dedicated contacts for Members, Students and firms.

Login
  • Annual renewal
  • About us
  • Contact us
  • Find a CA
  1. About us
    1. Governance
  2. Members
    1. Become a member
    2. Newly qualified
    3. Manage my membership
    4. Benefits of membership
    5. Careers support
    6. Mentoring
    7. CA Wellbeing
    8. More for Members
    9. Area networks
    10. International communities
    11. Get involved
    12. Top Young CAs
    13. Career breaks
    14. ICAS podcast
    15. Newly admitted members 2022
    16. Newly admitted members 2023
  3. CA Students
    1. Student information
    2. Student resources
    3. Learning requirements
    4. Learning updates
    5. Learning blog
    6. Totum Pro | Student discount card
    7. CA Student wellbeing
  4. Become a CA
    1. How to become a CA
    2. Routes to becoming a CA
    3. CA Stories
    4. Find a training agreement
    5. Why become a CA
    6. Qualification information
    7. University exemptions
  5. Employers
    1. Become an Authorised Training Office
    2. Resources for Authorised Training Offices
    3. Professional entry
    4. Apprenticeships
  6. Find a CA
  7. ICAS events
    1. CA Summit
  8. CA magazine
  9. Insight
    1. Finance + Trust
    2. Finance + Technology
    3. Finance + EDI
    4. Finance + Mental Fitness
    5. Finance + Leadership
    6. Finance + Sustainability
  10. Professional resources
    1. Anti-money laundering
    2. Audit and assurance
    3. Brexit
    4. Charities
    5. Coronavirus
    6. Corporate and financial reporting
    7. Business and governance
    8. Ethics
    9. Insolvency
    10. ICAS Research
    11. Pensions
    12. Practice
    13. Public sector
    14. Sustainability
    15. Tax
  11. CPD - professional development
    1. CPD courses and qualifications
    2. CPD news and updates
    3. CPD support and advice
  12. Regulation
    1. Complaints and sanctions
    2. Regulatory authorisations
    3. Guidance and help sheets
    4. Regulatory monitoring
  13. CA jobs
    1. CA jobs partner: Rutherford Cross
    2. Resources for your job search
    3. Advertise with CA jobs
    4. Hays | A Trusted ICAS CA Jobs Partner
    5. Azets | What's your ambition?
  14. Work at ICAS
    1. Business centres
    2. Meet our team
    3. Benefits
    4. Vacancies
    5. Imagine your career at ICAS
  15. Contact us
    1. Technical and regulation queries
    2. ICAS logo request

ICAS responds to the 2023 - 2024 Scottish Budget

  • LinkedIn (opens new window)
  • Twitter (opens new window)
By ICAS

15 December 2022

ICAS Tax experts share their views on the 2023 - 2024 Scottish Budget announcement

Following today’s 2023 - 2024 Scottish Budget announcement, ICAS experts examine key aspects of the announcement and how this addresses issues affecting many, such as the freezing of tax thresholds and increase in income tax.

On the key announcements in today’s Scottish Budget, ICAS tax experts said:

Justine Riccomini, Head of Tax (Employment and Devolved Taxes), said: “Today's Budget has not improved the tax burden on middle earners at a time of a cost-of-living crisis. With today's Bank of England interest rate rise likely to impact mortgage payments, employees living in Scotland earning between £43,663 and £50,270 will now pay 42% Income Tax, as well as 12% Class 1 National Insurance, on each additional £1 they earn - which reflects an effective rate of tax of 54% in that earnings range - 22% more than their counterparts elsewhere in the UK.

This is in stark contrast to Wales, which published its Budget yesterday and once again chose to keep income tax rates and bands the same as those of Westminster.”

Scottish Rate of Income Tax (SRIT) - Additional rate band limit reduced from £150,000 to £125,140 in line with rest of UK

ICAS notes the reduction in the threshold for the top rate of Income Tax in Scotland to £125,140. As this is in line with the rest of the UK, the threshold will apply for Scottish taxpayers on their non-savings, savings and dividend income.

Justine Riccomini, Head of Tax (Employment and Devolved Taxes) at ICAS, said "After last month's UK Autumn Statement, the lowering of the threshold for the top rate of income tax in Scotland was widely expected. This move could raise about £80 million, although the interactions with the Block Grant mechanism (Barnett Formula) under the Fiscal Framework agreement will essentially make this additional funding less visible, as they will be absorbed into a myriad of additional funding arrangements through the Block Grant. Had the Deputy First Minister chosen to do nothing, the Block Grant would have been augmented by around £1.5bn anyway."

Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS said: "The reduction in the additional rate threshold will affect the Income Tax paid by successful unincorporated businesses. Many of those businesses may now wish to set up as a limited company, although this will be based on many different factors.”

Increase in top rate of Scottish Rate of Income Tax from 46% to 47%

ICAS notes with concern the increase in the higher and top rate of Income Tax bands.

Justine Riccomini, Head of Tax (Employment and Devolved Taxes) at ICAS said: "Combined with the reduction in the top rate threshold, the increase in the higher rate and top rates of Income Tax could affect the attractiveness of Scotland as a place to set up a business. In many sectors, the international demand for talent means that salaries above £43,662, at which higher rate tax is paid, are not exceptional. The Scottish tax rate may make it more difficult to attract skilled workers to be employed in Scotland."

"The combination of the 2% differential in both higher rate and top rate taxes between Scotland and the rest of the UK, together with the lower threshold at which higher rate tax starts in Scotland, may start to have an impact on people’s choices, particularly at middle income levels."

Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS said: "The decisions on Scottish Income Tax rates will affect many Owner Managed Businesses based in Scotland. They may wish to consider whether to relocate elsewhere or set up as a limited company, although this is something they should seek professional advice on.”

Scottish Rate of Income Tax - freezing of threshold rates

​ICAS notes the freezing of the thresholds for the Scottish Rates of Income Tax.

Justine Riccomini, Head of Tax (Employment and Devolved Taxes) at ICAS said: "Today's Budget has not improved the tax burden on middle earners. Employees living in Scotland earning between £43,663 and £50,270 will be asked to pay 42% Income Tax, which is 22% higher than similar employees elsewhere in the UK. By freezing the tax bands, as wages rise, more and more employees will fall into this range.

This group of employees includes for example NHS Band 7 staff, which would include registered nurses, physiotherapists and mental health specialists. Attracting employees in this group to employers in Scotland becomes much more challenging with such a high marginal tax rate."

Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS said: "Many family businesses who are sole traders or partnerships will have to pay additional Income Tax as a result of this change. In some cases, it could act as a disincentive for them to expand or grow their business."

Land and Buildings Transaction Tax (LBTT) - increase in additional dwelling supplement rate from 4%

ICAS notes the increase in the rate of the Additional Dwelling Supplement (ADS) rate from 4% to 6%, effective from 16 December 2022.

Justine Riccomini, Head of Tax (Employment and Devolved Taxes) at ICAS, said: "Whilst the ADS is ostensibly intended to improve the availability of housing for first time buyers, it is likely to be perceived by many as a 'tax grab', making it more expensive for those looking to buy a property to invest as an alternative source of income."

Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS said: "Companies buying residential property pay the Additional Dwelling Supplement on any purchase of residential property in Scotland above the £40,000 threshold, so this change will make it cost more for all companies in terms of the tax they pay on their residential property purchases in Scotland."

LBTT - freezing of threshold rates

Justine Riccomini, Head of Tax (Employment and Devolved Taxes) at ICAS said: "The freezing of LBTT threshold rates is a stealthier way to raise tax across all society levels in Scotland. With mortgage interest rates expected to rise again following today’s Bank of England base rate announcement, it remains to be seen what the longer-term impact is on residential property transactions. The tax raising impact might be lower than expected if the property market sees significant reductions in volume or impacts on property prices."

Increase in income tax by 1% to be ring fenced for health and social care

Justine Riccomini, Head of Tax (Employment and Devolved Taxes) at ICAS said: "The Scottish Government has taken the unusual step of effectively substantially replacing the health and social care levy which was repealed by the UK Government in September 2022, by increasing income tax on the higher and top rate bands by 1% and ring-fencing it for health and social care. ICAS is not in favour of hypothecation and time will tell as to whether the taxpayers affected by the measure receive this well."

Non-domestic rates

​ICAS welcomes the extension of freezing of the Basic Property Rate of Non-Domestic Rates, as well as the incentives being given to businesses for investing in plant and machinery which will help facilitate the transition to Net Zero.

Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes) at ICAS said: "Businesses in Scotland were badly affected by the COVID19 pandemic, but may also be affected in the months ahead by reduced consumer demand amidst the cost of living crisis. Protection from inflation in Non-Domestic rates will be welcome for businesses as they navigate through a period of uncertainty, with smaller businesses also to benefit from the extension of the Small Business Bonus Scheme.

We also welcome the announcement that the Scottish Government will encourage businesses to invest in renewable energy by granting exemptions from their Non-Domestic rates liability for purchasing qualifying plant and machinery. Our Members often tells us how tax reliefs will influence the right behaviour, so this is an excellent example of that."

Scottish Landfill Tax - increase in rates

Justine Riccomini, Head of Tax (Employment and Devolved Taxes) at ICAS said: "Scottish Landfill Tax raises around £100m per annum for the Scottish Government and the increase in rates payable will not significantly impact the Scottish Government's budget income. We however welcome the increase, as it is expected that it will contribute towards a more sustainable Scotland and encourage positive direction of travel in the drive towards Net Zero."

Measures not announced

David Menzies, Director of Practice, said: "It is unfortunate that the Deputy First Minister did not indicate in his Statement any movement on the devolved tax powers in relation to VAT and Air Departure Tax. Both powers have now been available to the Scottish Government for several years but issues on their introduction remain unresolved. ICAS would like to see a clear path set out for both measures to assist in providing business with certainty over their introduction - or that the powers will not be used."

ICAS responds to Autumn Statement 2022

By ICAS

17 November 2022

The role of tax in getting to net zero

By Susan Cattell, Head of Tax Technical Policy

25 April 2022

2022-01-xero 2022-01-xero
ICAS logo

Footer links

  • Contact us
  • Terms and conditions
  • Modern slavery statement
  • Privacy notice
  • CA magazine

Connect with ICAS

  • Facebook (opens new window) Facebook Icon
  • Twitter (opens new window) Twitter Icon
  • LinkedIn (opens new window) LinkedIn Icon
  • Instagram (opens new window) Instagram Icon

ICAS is a member of the following bodies

  • Consultative Committee of Accountancy Bodies (opens new window) Consultative Committee of Accountancy Bodies logo
  • Chartered Accountants Worldwide (opens new window) Chartered Accountants Worldwide logo
  • Global Accounting Alliance (opens new window) Global Accounting Alliance
  • International Federation of Accountants (opens new window) IFAC
  • Access Accountancy (opens new window) Access Acountancy

Charities

  • ICAS Foundation (opens new window) ICAS Foundation
  • SCABA (opens new window) scaba

Accreditations

  • ISO 9001 - RGB (opens new window)
© ICAS 2022

The mark and designation “CA” is a registered trade mark of The Institute of Chartered Accountants of Scotland (ICAS), and is available for use in the UK and EU only to members of ICAS. If you are not a member of ICAS, you should not use the “CA” mark and designation in the UK or EU in relation to accountancy, tax or insolvency services. The mark and designation “Chartered Accountant” is a registered trade mark of ICAS, the Institute of Chartered Accountants of England and Wales and Chartered Accountants Ireland. If you are not a member of one of these organisations, you should not use the “Chartered Accountant” mark and designation in the UK or EU in relation to these services. Further restrictions on the use of these marks also apply where you are a member.

ICAS logo

Our cookie policy

ICAS.com uses cookies which are essential for our website to work. We would also like to use analytical cookies to help us improve our website and your user experience. Any data collected is anonymised. Please have a look at the further information in our cookie policy and confirm if you are happy for us to use analytical cookies: