Share with your friends

The Scottish Budget 2021/22

The Scottish Budget 2021/22

Finance Secretary Kate Forbes presented the Scottish Budget to Holyrood on 28 January 2021 – here’s what you need to know.

Vishal Chopra

Partner, Head of Tax in Scotland

KPMG in the UK


Also on

Finance Secretary Kate Forbes presented the Scottish Budget to Holyrood on 28 January 2021.This year’s focus was on certainty and stability to support businesses and households in adjusting to Brexit and recovering from the pandemic. On that basis, and perhaps as it comes before the UK Budget and in an election year, there were few surprises on tax. In this article we summarise the key announcements.

As a minority administration, the Scottish Government needs the support of at least one other party to pass its Budget. The initial proposals might also be revised following the UK Budget on 3 March 2021. The measures summarised below might therefore change during the Budget’s passage through the Scottish Parliament.

Key tax measures for individuals

Income tax

There are no changes to the starter, basic, intermediate, higher and top rates of Scottish income tax. The thresholds from which the basic, intermediate and higher rates of tax apply will increase in line with inflation.

Subject to certain exceptions, Scottish taxpayers will be entitled to a tax-free personal allowance which will be set at the UK Budget in March 2021. The standard personal allowance for 2021/22 is expected to be £12,570.

Assuming this is indeed the case, for individuals who are entitled to a full standard personal allowance (specific individuals’ personal allowances may be larger or smaller than this depending on their personal circumstances), the rates and bands that will apply to relevant income of Scottish taxpayers for 2021/22 will be as set out below:


Range of income subject to Scottish rates




Above £12,570 to £14,667

19 percent


Above £14,667 to £25,296

20 percent


Above £25,296 to £43,662

21 percent


Above £43,662 to £150,000

41 percent


Above £150,000

46 percent

Land and Buildings Transaction Tax – residential property

The temporary increase to the starting threshold for residential property transactions will expire on 31 March 2021 as expected. For transactions with an effective date on or after 1 April 2021, the applicable bands and rates of Land and Buildings Transaction Tax (LBTT) will be as follows:

Band of consideration


Up to £145,000

0 percent

Above £145,000 to £250,000

2 percent

Above £250,000 to £325,000

5 percent

Above £325,00 to £750,000

10 percent

Above £750,000

12 percent

First time buyer relief, which increases the effective nil rate band to £175,000 will remain, and the Additional Dwelling Supplement (ADS), which applies to relevant transactions above £40,000, will stay at four percent.

Assuming the current administration forms the next Scottish Government following May’s elections, a consultation will be launched early in the next parliamentary term on aspects of the ADS, including the period within which a previous main residence must be sold in order for ADS to be refunded.

Key tax measures for businesses

Non-domestic (business) rates

In a surprise announcement, non-business rates will decrease by 0.8p.

From 1 April 2021 the non-domestic rates will be as follows:

Basic Property Rate (‘poundage’)


Intermediate Property Rate (rateable values between £50,001 and £95,000)


Higher Property Rate (rateable value above £95,000)


The 100 percent relief for retail, hospitality and leisure businesses will be extended for three months into 2021/22.

Land and Buildings Transaction Tax – non-residential property

LBTT rates and bands will remain unchanged for non-residential conveyances, as set out below:

Band of consideration



Up to £150,000

0 percent

Above £150,000 to £250,000

1 percent

Above £250,000

5 percent

Similarly, the rates and bands that apply to non-residential leases remain unchanged:

Net present value of rent payable



Up to £150,000

 0 percent

Above £150,000 to £2,000,000

 1 percent

Above £2,000,000

 2 percent

Environmental taxes

The standard and lower rates of Scottish Landfill Tax (SLfT) from 1 April 2021 will maintain alignment with corresponding taxes in other parts of the UK:

Materials sent to landfill

Proposed rates from 1 April 2021


Standard rate

£96.70 per tonne

Lower rate

£3.10 per tonne

The tax credit for contributions to the Scottish Landfill Communities Fund will remain capped at 5.6 percent of an operator’s total SLfT liability.

For further information please contact :

© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organisation please visit

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Save, Curate and Share

Save what resonates, curate a library of information, and share content with your network of contacts.

Sign up today