Scotland Act 2016 implementation: eighth annual report

1. Introduction

1. This is the eighth report on the implementation of the Scotland Act 2016. It is intended to inform Parliament of the implementation work that has been carried out on fiscal powers in the Scotland Act 2016 as required by paragraph 93 of the Fiscal Framework^[1].

2. The UK Government produces a separate report on the implementation work they have carried out, which is published on the same day.

3. Previous reports informed on implementation of both Scotland Act 2012 and 2016 fiscal powers, with a report on the former required by Section 33 of the 2012 Act. Section 33 called for a ‘final report’ on or as soon as practicable after 1^st April 2020, or if later, the first anniversary of the day on which the 2012 Act provisions came into force.

4. All provisions of the Scotland Act 2012 have now come into force, save for consequential amendments in Schedule 2 relating to the Scottish rate of income tax. Therefore, the Implementation Report published in 2023 was the first to only inform on the 2016 Act.

5. The Scotland Act 2016 received Royal Assent in March 2016 and devolved a range of further powers to the Scottish Parliament. These included:

• Further income tax powers, including the power to set rates and bands
• Certain social security benefits
• Provisions to introduce a new Scottish tax on the carriage of passengers by air from Scottish airports, and to disapply Air Passenger Duty in Scotland
• Provisions to introduce a new Scottish tax on the commercial exploitation of aggregates, and to disapply the UK Aggregates Levy in Scotland
• Fines, forfeitures and fixed penalties
• Assignment of Value Added Tax

6. This report provides an update on these sections, as well as non-legislative elements in the Fiscal Framework including:

• Block Grant Adjustments
• Administration and implementation costs
• Policy Spillover effects
• Borrowing
• Scotland Reserve

7. The report provides an update on all legislative, policy and implementation work that has been carried out since the previous report on 22^nd May 2023 and outlines any forecast administration and implementation costs incurred in 2023-24.

8. The formatting of this year’s report has been revised, with the aim of avoiding duplication with other reports. For example, information on tax bands in last year’s report has not been included this year as the information is available in the Scottish Government’s Medium-Term Financial Strategy^[2].

9. Administration costs are the ongoing costs incurred in supporting the delivery of the Scottish Government's responsibilities under the Scotland Acts 2012 and 2016. Implementation costs are one-off costs associated with the initial investment to set up all the necessary systems and other elements required for the delivery of the powers under the Scotland Acts 2012 and 2016, whether through setting up a body or a service or implementing IT systems.

10. Since the last Implementation Report, the Scottish Government and HM Treasury (HMT) have carried out a review of the Fiscal Framework and reached a new Fiscal Framework Agreement^[3]. Further information can be found in Chapter 9, Fiscal Framework Implementation.

11. The next report on the Scotland Act 2016 will be published in 2025.