Comments by Sharon Blain, Tax Director, PwC Scotland

“This was something of a “stop-gap” Budget focused on stability for today as a stepping stone to recovery and growth for tomorrow as Scotland continues to face the economic headwinds of the pandemic.

“Support for business was at the heart of the Budget, with the welcome news that business rates relief for retail, leisure, aviation and hospitality sectors will be extended to 30 June 2021. Supermarkets and other Scottish businesses who were able to repay the value of their rates reliefs have been used as the source of this welcome boost back into the Scottish coffers and Ms Forbes was keen to signpost that further certainty would be available should the UK government extend relief further in the March Budget. In addition, the reduction in the poundage rate for all business rates back to 19/20 levels is highlighted as increasing Scotland’s competitive position as compared to the rest of the UK.

“The hospitality industry may have spent years railing against the rise of the supermarkets – brought into even sharper focus through lockdown where buying beer and wine from the big retailers replaced a Friday night out in the pub – but with the latter’s repayments of rates relief now being used to extend the scheme for the likes of pubs and shops, landlords may be thinking that every little helps.

“Scots will see little change to the amount of income tax they pay. Rates will remain the same while most bands will move in accordance with inflation if at all. In combination with the increase in the personal allowance previously announced by the UK Government, this will give Scottish taxpayers a small decrease in overall income tax.

“In another supportive move, and as a recognition of the strain on living expenses, additional funding has been allocated to councils to enable them to freeze council tax should they choose.

“There was also a perhaps unsurprising decision to drop the manifesto pledge to effectively increase the personal allowance to £12,750 by introducing a zero tax rate. Given the cost (estimated at £80m) this was no longer a priority.

“The freeze on LBTT will end in March, but this leaves a question over whether the move will take the heat out of the housing market. The freeze, which was introduced to regenerate the market after the onset of the pandemic, has seen a marked increase in market activity and this sector will be hoping that momentum continues.

“A marker was also put in the sand with the promise of further reviews to potentially remove inequalities between relief on additional homes on either side of the Border.

“In a year when the world’s eyes will be on Glasgow for the COP26 summit, there was an expected focus on climate change with £2 billion committed to carbonisation – the Government’s next job will be ensuring the public buys into its mission to achieve net zero by 2045. Beyond these headline figures and into the detail, some of the more interesting policies include an additional £27 million to expand woodland creation and the associated infrastructure, supporting green jobs as well as additional rates reliefs for hydro and district heating networks to help drive the green economic recovery.”