Scottish Budget 2024 Summary

Scottish Finance Secretary Shona Robison’s 2025/26 Budget, revealed on 6 December, will see greater divergence in the tax paid by Scottish workers and those in the rest of the UK, and further injections into Scottish welfare. At the heart of the Budget was a £800 million uplift in social security funding, which includes reinstating winter fuel payments for all Scottish pensioners and uprating the Scottish Child Payment, the SNP's marquee welfare policy, with inflation. With an eye on the 2026 Holyrood election, the Scottish government has also heaped pressure on Labour by committing to scrapping the two-child benefit cap.

Benefits

• The biggest announcement in the Budget isn’t in fact part of Robison’s 2025/26 tax and spending plans at all, and details are scarce about how it will be achieved as the Scottish government will rely on cooperation from the UK government. Nonetheless, Robison has vowed to end the benefits cap on families with more than two children.
• Currently, parents in the UK can only claim universal credit or child tax credit for their first two children, with a few exceptions. Robison said she is aiming to remove the cap in Scotland by April 2026, a month before the next Scottish Parliament election. The Scottish Fiscal Commission said as it was only sent the proposal a few days before the Budget it was unable to cost it but called it a "fiscal risk".
• The headline-grabbing announcement came a few days after the Scottish government revealed it will reinstate the winter fuel payment for every pensioner in Scotland next year. The UK government scrapped universal entitlement to the payment in favour of a means-tested approach earlier this year.

Income tax

• There were no new tax bands. However, there were changes to the upper limit of the Starter rate band, moving from £14,877 in the current tax year to £15,398 for the 2025/26 tax year. The lower limit on this band remains frozen at £12,571.
• For the basic rate band, this now starts at £15,398 and the upper limit will be increased to £27,491. For 2024/25 this was £14,877 to £26,561.
• For the Intermediate band the starting point has increased from £26,562 to £27,492, but the upper limit is to remain at £43,662.
• This 3.5% increase to the starter and intermediate bands means that people in Scotland earning less than £30,000 will pay less tax than if they lived in England or Wales.
• With the other bands remaining at the same levels, a fiscal drag effect will bring more people into paying higher rates of tax as wages rise. Scottish Conservative leader Russell Findlay said workers earning over £30,000 in Scotland will pay more tax than those in the rest of the UK.
• Following repeated efforts to diverge Scotland's income tax regime from the rest of the UK since the Scottish Government gained the devolved power to set its own tax policy on earnings from employment in 2017, the SNP administration has now committed to no further changes in this area until 2026.

Property

• English property investors lamented the UK chancellor's decision in the Autumn Budget to increase the Stamp Duty Land Tax surcharge applied to purchases of additional residential dwellings from 3% to 5%. However, the equivalent tax in Scotland, the Land and Building Transaction Tax (LBTT), already applied a 6% extra charge on additional residential properties and Robison increased this to 8% from 5 December 2024.

Business

• Despite increasing real-terms spending across multiple government departments, including housing, the NHS, renewable energy and the arts, day-to-day spending for the Rural Affairs, Land Reform and Islands portfolio will in fact reduce by 3.1% in real terms.
• The Scottish Countryside Alliance called the news "disappointing" for Scottish farmers who are already reeling after Rachel Reeves' decision to charge inheritance tax on farms worth over £1 million from April 2026. IHT is a UK-wide policy decision, not a devolved tax.
• Robison has matched the 40% business rates relief for hospitality firms announced in the UK's Autumn Budget but decided to only offer it to venues with a rateable value up to £51,000. This means around 2,600 hospitality companies, as well as all retail and leisure firms who Robison has excluded entirely from the relief, will pay full business rates uprated by inflation in April.

Speak to your financial adviser about how any of the announcements in the Scottish Budget will impact you, and how to build the right plan to meet your retirement and legacy goals. Alternatively, you can also request a call back.