[UK] Scottish Budget Delay


For anyone looking for a write-up of the draft Scottish budget, please have a read of this news piece.

Derek Mackay the Scottish Finance Secretary had been due to present his draft spending and taxation plans on the 12th of December 2019, well after the UK budget that was planned for the 6th of November.  As we all know, the UK budget was cancelled and there has been a General Election thrown into the mix since then as well.  On the 15th of November, Mr Mackay announced that his budget would not take place until “post-Christmas” 2019 and a new date would be agreed with the Scottish Parliament’s Finance Committee as soon as possible. 

As Mr Mackay said in communication with the Finance and Constitution Committee and the Scottish Fiscal Commission, “Without a UK budget we would not know the final details of any Barnett consequentials from UK spending, or the impact of UK tax decisions”. 

The Barnett consequentials or Barnett formula is the system that is used that dictates the level of public spending per person in the devolved nations.  Named after the person who devised it (ex-Labour Chief Secretary to the Treasury Joel Barnett), it is a HM Treasury convention that has been used by successive governments and results in the awarding of “block grants” to Scotland, Wales and Northern Ireland. 

Simply, if the is no UK budget to allocate the block grant, Scotland cannot know with certainty the money it will receive and cannot hope to determine its spending and taxation plans.

Global Payroll Association Comment 

Whilst we fully understand the Scottish government’s decision to delay their budget, this is no comfort for software developers or individuals. 

Developers need to know the Scottish tax rates and bands as soon as possible, especially as the last few years have seen them amended at the last minute before the final budget is approved into law.  A delay to the draft budget inevitably means a delay to the Scottish scrutiny process and a knock-on delay to payroll developer professionals.  For them to be effective for the tax year, a Scottish rate resolution must be passed before the start of the tax year (i.e. by the 5th of April 2020).  It seems increasingly likely that Scottish taxpayers will start the new tax year on the 2019/20 tax rates and bands and have them amended shortly afterwards. 

Individuals will want to know their council tax for the new financial year from April and councils are required to set these by mid-March.

The cancelled budget and the General Election will have impacts far beyond electing the new lot of MPs for the next Parliamentary session.  Or, could we see a Scottish budget before a UK budget, as that remains a possibility?