Fiscal framework: factsheet

Updates

11 July 2024: Letter to Finance and Public Administration Committee: Scottish income tax outturn reconciliation for 2022 to 2023

This letter to Finance and Public Administration Committee sets out the Income Tax reconciliation process and details the 2022-23 income tax reconciliation, which will be applied to the 2025-26 Scottish Budget.

14 June 2024: Letter to Finance and Public Administration Committee: Revisions to social security block grant adjustments

This letter to Finance and Public Administration Committee sets out revisions made to block grant adjustments for social security, following the agreement of block grant adjustments at the Spring Budget 2024.

These updates do not have any direct impact on the Scottish Budget, as Spring Budget BGAs are only indicative of the direction of travel and are not applied to our budget.

14 March 2024: Letter to Finance Committee: block grant adjustments from the Spring Budget 2024

This letter to Finance and Constitution Committee details how the updated UK Government tax revenue and social security expenditure forecasts, published by the Office for Budget Responsibility (OBR) on 06 March 2024, inform the latest block grant adjustments (BGAs).  

These BGAs are only indicative and don’t have a direct impact on the Scottish Budget. The BGAs show the direction of travel for Income Tax, Land and Buildings Transaction Tax (LBTT), Scottish Landfill Tax (SLfT) and social security BGAs.

19 December 2023: Scottish Budget 2024 to 2025: implementing the renegotiated fiscal framework

This publication sets out a summary of changes agreed as part of the revised 2023 Scottish fiscal framework, and how they affect the 2024 to 2025 Scottish Budget.

6 December 2023: Letter to Finance Committee: block grant adjustments for the Scottish Budget 2024-2025

This letter to Finance and Constitution Committee details how the updated UK Government tax revenue and social security expenditure forecasts, published by the Office for Budget Responsibility (OBR) on 22 November 2023, inform the block grant adjustments (BGAs) for the Scottish Budget 2024-2025.

In addition, it sets out (i) the in-year reconciliations to the 2023-24 Budget for the BGAs for Land and Buildings Transaction Tax (LBTT), Scottish Landfill Tax (SLfT) and social security benefits, and; (ii) the final reconciliation to the 2024-25 Budget relating to 2021-22 Income Tax and the BGAs for 2022-23 LBTT, SLfT, Fines, Forfeitures and Fixed Penalties, and Carer’s Allowance. 

2 August 2023: Agreement reached on First fiscal framework review

This statement announces the conclusion of the first review of the fiscal framework, jointly agreed between the Scottish Government and HM Treasury. Also published this day, was the updated fiscal framework agreement, and a joint communique with the UK Government.

Furthermore, the independent report jointly commissioned with HM Treasury was published on this day. The report considers the various methods of calculating block grant adjustments, and how they met the principles set out by the Smith Commission. also published its response to the call for evidence which took place ahead of the independent report.

6 July 2023: Scottish Government and HM Treasury joint statement regarding Scottish Income Tax outturn reconciliation for 2021-2022

This statement, jointly agreed between the Scottish Government and HM Treasury, sets out the Income Tax reconciliation process and details the 2021-2022 Income ax reconciliation, which will be applied to the 2023-2024 Scottish Budget.

27 March 2023: Letter to Finance Committee: block grant adjustments from the Spring Budget 2023

This letter to Finance and Constitution Committee details how the updated UK Government tax revenue and social security expenditure forecasts, published by the Office for Budget Responsibility (OBR) on 15 March 2023, inform the latest block grant adjustments (BGAs).  

These BGAs are only indicative and don’t have a direct impact on the Scottish Budget. The BGAs show the direction of travel for Income Tax, Land and Buildings Transaction Tax (LBTT), Scottish Landfill Tax (SLfT) and social security BGAs.

29 November 2022: Letter to Finance Committee: block grant adjustments for the Scottish Budget 2023-2024

This letter to Finance and Constitution Committee details how the updated UK Government tax revenue and social security expenditure forecasts, published by the Office for Budget Responsibility (OBR) on November 17 2022, inform the block grant adjustments (BGAs) for the Scottish Budget 2023-2024.

In addition, it sets out the in-year reconciliations to the 2022-23 Budget for the BGAs for Land and Buildings Transaction Tax (LBTT), Scottish Landfill Tax (SLfT) and social security benefits.

7 July 2022: Scottish Government and HM Treasury joint statement regarding Scottish Income Tax outturn reconciliation for 2020-2021

This statement, jointly agreed between the Scottish Government and HM Treasury, sets out the Income Tax reconciliation process and details the 2020-21 Income Tax reconciliation, which will be applied to the 2023-24 Scottish Budget. It also contains details relating to an inconsistency discovered by HMRC as to the classification of some taxpayers and how its correction impacts outturn data and Scottish Government funding. 

27 June 2022: Scottish Government and HM Treasury jointly commission the independent report, which will precede the fiscal framework review, in a recent Joint Exchequer Committee meeting.

The independent report will evaluate the block grant adjustment funding arrangements for tax and welfare devolution against the principles agreed by the Smith Commission.

A terms of reference has been agreed between the UK and Scottish governments and will inform the work of the authors.

28 March 2022: Letter to Finance Committee: block grant adjustments from the Spring Budget 2022

This letter to Finance and Constitution Committee details how the updated UK Government tax revenue and social security expenditure forecasts, published by the Office for Budget Responsibility (OBR) on 23 March 2022, inform the latest block grant adjustments (BGAs).  

These BGAs are only indicative and don’t have a direct impact on the Scottish Budget. The BGAs show the direction of travel for Income Tax, Land and Buildings Transaction Tax (LBTT), Scottish Landfill Tax (SLfT) and social security BGAs.

09 November 2021: Letter to Finance Committee: block grant adjustments for the Scottish Budget 2022-2023

This letter to Finance and Constitution Committee details how the updated UK Government tax revenue and social security expenditure forecasts, published by the Office for Budget Responsibility (OBR) on 27 October 2021, inform the block grant adjustments (BGAs) for the Scottish Budget 2022-2023.

In addition, it sets out the in-year reconciliations to the 2021-22 Budget for the BGAs for Land and Buildings Transaction Tax (LBTT), Scottish Landfill Tax (SLfT) and social security benefits.

3 November 2021: Scottish Government and HM Treasury jointly agree the scope of an independent report, as part of the fiscal framework review, in a recent Joint Exchequer Committee meeting. 

This letter to the Chief Secretary to the Treasury sets out how both governments were able to reach an agreement in principle to commission an independent report on the block grant adjustment arrangements, prior to a wider review of the fiscal framework.

The next steps in the process are to consider the potential authorship for the independent report, and finalise the Terms of Reference for publication, with a view to commissioning the report as soon as possible. 

22 July 2021: Scottish Government and HM Treasury joint statement regarding Scottish Income Tax outturn reconciliation for 2019-20

This statement, jointly agreed between the Scottish Government and HM Treasury, sets out the Income Tax reconciliation process and details the provisional 2019-20 Income Tax reconciliation, which will be applied to the 2022-23 Scottish Budget, once confirmed or revised following the National Audit Office annual audit of the HMRC Trust Statement.

15 March 2021: Letter to Finance Committee: use of provisional block grant adjustments for the Scottish Budget 2021-2022

This letter to Finance and Constitution Committee sets out a comparison of the updated BGAs provided alongside the UK Budget 2021-22 to the provisional BGAs, which underpinned the Scottish Budget 2021-2022 published in January 2021. It confirms that the Cabinet Secretary for Finance has decided to use the provisional BGAs to inform the Scottish Budget 2021-2022 rather than the updated BGAs. It sets out background on how the BGAs have changed and explains the reasoning for choosing the provisional BGAs, namely that it protects the Scottish Budget in the short-term. It also covers the reconciliations that relate to the 2021-2022 Budget, how these will be managed and the Cabinet Secretary’s view on what further flexibilities might be required. It goes on to confirm that, following the OBR’s latest forecasts, the criteria for a Scotland-specific economic shock in 2021-2022 continue to be met, but that this continues to result from timing differences between the SFC and OBR forecasts. 

23 December 2020: Letter to Finance Committee: correction to block grant adjustments for the Scottish Budget 2021-2022

This letter to Finance and Constitution Committee details that the Office for Budget Responsibility (OBR) advised of an error in their UK Non-savings Non-dividend, Welsh and Scottish income forecasts which determine the block grant adjustments. It sets out a revised table showing the tax and social security BGAs for the forecasting period with the corrected 2020-21 Income Tax BGA.

7 December 2020: Letter to Finance Committee: block grant adjustments for the Scottish Budget 2021-2022

This letter to Finance and Constitution Committee details how the updated UK Government tax revenue and social security expenditure forecasts, published by the Office for Budget Responsibility (OBR) on November 25 2020, inform the provisional block grant adjustments (BGAs) for the Scottish Budget 2021-2022.

In addition, it sets out (i) the in-year reconciliations to the 2020-21 Budget for the BGAs for Land and Buildings Transaction Tax (LBTT), Scottish Landfill Tax (SLfT) and social security benefits, and; (ii) the final reconciliation to the 2021-22 Budget relating to 2018-19 Income Tax and the BGAs for 2019-20 LBTT, SLfT, Fines, Forfeitures and Fixed Penalties, and Carer’s Allowance. 

24  June 2020: Coronavirus (COVID-19) - funding and fiscal flexibilities: letter from Cabinet Secretary for Finance to Chief Secretary to the Treasury 

This letter to the Chief Secretary to the Treasury from Cabinet Secretary of Finance sets out a request to the UK Government for temporary additional fiscal powers and flexibility, beyond those currently set out in the fiscal framework, to support our response to the exceptional economic and fiscal challenges brought about by COVID-19.