On Wednesday, 4th December 2024, Finance Secretary Shona Robison revealed the Scottish Budget for 2025/26, detailing a series of decisions aimed at promoting sustainable economic growth, improving public services, and advancing climate action. The budget places a strong emphasis on investment in key sectors, supporting low and middle-income earners, and moderating the effects of challenging economic conditions.
With the record investment of £2bn increase in frontline NHS spending, the Budget is bringing the total health and social care investment to £21bn - aiming to reduce NHS waiting lists, improve access to GP services, and support major hospital projects.
As part of a broader effort to support businesses, the Scottish Government has introduced business rates relief for the hospitality sector, providing a financial cushion for businesses struggling with high operational costs.
Robison confirmed that the basic and intermediate income tax thresholds will increase by 3.5% in 2025/26 ensuring that the majority of taxpayers in Scotland will continue to pay less income tax than the rest of the UK. The Finance Secretary also reiterated that no new income tax bands would be introduced, providing certainty for businesses and individuals across the country.
Furthermore, the LBTT additional dwelling supplement will increase from 6% to 8%, and landfill tax rates will also rise to £126.15 per tonne (standard rate) and £4.05 per tonne (lower rate).
In line with its commitment to sustainability, the Scottish Government will allocate £25 million to support green energy jobs and the creation of a new green energy supply chain. This initiative is part of the broader £4.9bn package aimed at addressing the climate and nature crises, with a focus on reducing emissions, protecting the environment, and creating job opportunities.
Robison’s budget also promises a £34 million uplift in cultural spending, which will help transform Scotland's cultural landscape and increase access to the arts. Furthermore, £29m will be invested into an additional support needs (ASN) plan, which will help maintain teacher numbers and train new ASN teachers. The budget will also fund more breakfast clubs in primary schools and infrastructure investments.
While the Scottish Budget 2025/26 focuses heavily on social welfare, public services, and environmental initiatives, the UK Government’s Autumn Budget presented by Chancellor Rachel Reeves earlier this year introduced several different measures.
One of the biggest contrasts between the two budgets is the tax approach. In the Autumn Budget, UK tax rates for individuals and businesses were adjusted, including a rise in Employer National Insurance contributions and changes to Capital Gains Tax and Inheritance Tax. In contrast, the Scottish Government opted to freeze income tax rates and to increase the lower tax rate thresholds by 3.5%, though we need to bear in mind that the Scottish system was starting from higher tax rates.
The Scottish Budget 2025/26 presents a clear vision for Scotland’s future, one focused on improving public services, fostering economic growth, and advancing climate action.
For a detailed breakdown of the Scottish Budget and its potential implications, please get in touch with your usual Hall Morrice contact or reach out to our Tax Partner, Chris Colville, for expert guidance.
Click here to download the full Scottish Budget summary report.
