Comments by Sharon Blain, Tax Director, PwC Scotland
“The theme of this year’s Scottish Budget was inclusive growth at a time when the climate emergency becomes an increasing priority.
“For businesses, there was some welcome news with £220 million of funding committed to the Scottish National Investment Bank as part of the ongoing £2 billion capitalisation project ahead of its planned launch, while £201m in additional City Deals funding was announced. All this was underpinned with £6 billion of capital spending, which the Government said would grow and modernise Scotland’s infrastructure, with a particular focus on low carbon technologies and infrastructure.
“Having seen its business rates bill passed earlier in the week the Scottish Government has continued to evolve a system which has faced great scrutiny. Of particular note is the move to reduce the number of businesses paying the Large Business Supplement by around 9,500. While these businesses will still pay an additional levy of 1.3p, the move does reduce the liability at a time when businesses are contending with difficult trading conditions.”
“Maintaining income tax bands and rates at their current level confirms that the Scottish Government believes it has a settled structure in place and barring any major changes to the system in England and Wales in next month’s UK Budget, workers will continue to pay tax at current levels, however the decision to freeze top band thresholds will mean more workers paying top rate levels of tax. While this will raise additional funds, the Scottish Government must remain conscious of potential disincentives this creates for highly-skilled workers.”
Land & Buildings Transaction Tax
“The introduction of a new 2% band for non-residential leases is squarely aimed at high-end buy-to-let market, and is the only change to the current system. There had been some talk about LBTT rates changing, however by maintaining current levels the Scottish Government seems confident the high-end of the market is not stagnating as a result of the new regime.”
Richard Spilsbury, partner and Sustainability Spokesperson, PwC Scotland, comments:
“With COP26 coming to Glasgow in November, Scotland will become the centre of the world’s attention as we combat the climate emergency. We welcome the Government’s announcement to increase spending on low carbon initiatives to £1.8 billion in 2020/21, which will help drive innovation as Scotland aims to hit net zero by 2045.
“As part of that, the £120 million Heat Transition Deal which recognises the need to boost the scale and pace of growth in decarbonising homes and buildings, takes a small but important step on the road to one of the biggest challenges of reaching the net zero target.”