Scotland Act 2016 implementation: eighth annual report
Report to inform parliament of the implementation work that has been carried out on fiscal powers devolved in the Scotland Act 2016.
2. Fully Devolved Taxes
The Scotland Act 2016 provided for the devolution of powers to introduce a tax charged on the carriage of passengers by air from airports in Scotland and on the commercial exploitation of aggregates in Scotland. Devolved taxes drawing on these powers have not yet been introduced.Costs
| £m | 2021-22 | 2022-23 | 2023-24 |
|---|---|---|---|
| Implementation | - | 0.1 | 0.3 |
| Administration/Operation | - | - | - |
12. Consistent with the approach taken for previous reports, the figures in Table 2.1 above relate only to Revenue Scotland. For this report, the 23-24 figure relates solely to staff costs incurred in work to prepare for the future introduction of a devolved replacement for the UK Aggregates Levy.
Aggregates Tax
The Scotland Act 2016 provided the Scottish Parliament with the power to legislate for a tax to replace the Aggregates Levy in Scotland. Aggregates Levy is a tax paid on the commercial exploitation of primary aggregates, i.e. crushed rock, sand and gravel.
2023-24 Developments
13. The Scottish Government introduced the Aggregates Tax and Devolved Taxes Administration (Scotland) Bill[4] to the Scottish Parliament on 14 November 2023.
14. The Bill set out the key arrangements for a devolved tax on the commercial exploitation of aggregates in Scotland, including to provide for its administration by Revenue Scotland.
15. Further background information regarding the Bill was set out in the Financial[5] and Policy[6] Memorandums introduced to the Scottish Parliament along with the Bill. The Scottish Government also published an analysis of the public consultation responses[7] and a variety of impact assessments.
Future plans
16. The Aggregates Tax and Devolved Tax Administration (Scotland) Bill and necessary secondary legislation will be considered by the Scottish Parliament. If approved by Parliament, the Scottish Government intends that introduction of SAT will occur on 1 April 2026.
17. In order for SAT to be introduced on 1 April 2026, the provisions of the 2016 Act which disapply the existing UKAL regime in Scotland will also require to be brought into force by regulations laid by His Majesty’s Treasury in the UK Parliament.
18. Revenue Scotland will be responsible for the collection and management of SAT when introduced. A programme of activity to deliver the systems, processes and other requirements for SAT is currently underway.
Air Departure Tax
2023-24 Developments
19. The introduction of Air Departure Tax (ADT) in Scotland remains deferred to allow the issues raised in relation to the exemption for flights departing from the Highlands and Islands to be resolved. The UK Government will maintain application of Air Passenger Duty in Scotland in the interim.
Future plans
20. We continue to explore all options to implement Air Departure Tax (ADT) in a way that protects Highlands & Islands connectivity and complies with the UK Government’s subsidy control regime.
21. The Scottish Government recognises the critical role air connectivity plays in the lives of residents and communities in the Highlands and Islands, and in the promotion of sustainable economic growth across the region.
22. Once a solution to the Highland & Islands exemption has been identified, we will review the rates and bands of ADT prior to the implementation of the tax, to ensure they are aligned with our world-leading climate ambitions. The UK-wide Air Passenger Duty will continue to apply in Scotland until ADT is implemented.
Contact
Email: rory.mack@gov.scot
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