Scottish Budget: What is in the Government's budget for 2023/24? Key points, including income tax rates

Household incomes are set to decline with Scotland facing a recession, leaving John Swinney making difficult and painful spending cut decisions alongside tax rises.

Danny Phillips, associate director of the Institute for Fiscal Studies, said the cash raised from higher tax rates in this Budget are only enough to cover Scottish NHS spending for 48 hours. But what are the details of the budget, where has the axe fallen and who will be expected to pay?


The biggest hit for individuals will be felt by those who earn the most. Mr Swinney has reduced the threshold for the top rate of tax to £125,140, following the move by Chancellor Jeremy Hunt earlier this year in Westminster.

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For those who earn £150,000, that will mean an extra £2,432 in tax next year compared to this one, and £3,858 more than they would pay if they lived in England.

An increase of a penny in the tax rate for the higher and top rate tax bands will also see those earning £60,000 pay an additional £163 in tax, with those earning £100,000 pay an extra £563 per year.

The tax changes also allow the SNP/Green Government to continue to state that for the majority of taxpayers, those earning less than £27,850, they will pay less in tax than they would if they lived elsewhere in the UK.

In total, £92m is being raised from the increase of the higher tax rate to 42p, with £18m raised from the freeze on the basic rate threshold. Just £3m will be raised from the highest earners who pay the top rate tax band despite the penny increase in the top rate to 47p.

John Swinney set out the Scottish budget to MSPs in Holyrood on ThursdayJohn Swinney set out the Scottish budget to MSPs in Holyrood on Thursday
John Swinney set out the Scottish budget to MSPs in Holyrood on Thursday

A further £34m will be raised by increasing the additional dwelling supplement – paid when a second home or a rental property is purchased – from 4 per cent to 6 per cent.


Health spending is the biggest beneficiary from the increased funding, with the entire £553m from changes to taxation being funnelled into the health service. Mr Swinney told MSPs the health budget would see a boost of more than £1bn, though some of this will be eroded by inflation and the potential for future pay deals.

Local Government

An additional £550m was announced for local authorities, and left the door open for significant council tax hikes in April. There will be no freeze or cap this year, and with no elections on the horizon, the public could see inflation-level increases to their council tax bills.

Councils are facing increased pay deals, which may need to be raised further next year. This deal is a significant improvement on the flat-cash, and real terms cut, set out in the resource spending review in May. There is also an expansion of the free school meals policy to cover holiday periods, a move that will cost the Government £30m.

Social Security

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The biggest spending commitment was made with devolved benefits. Mr Swinney committed to uprating all benefits under Scottish Government control by 10.1 per cent, the rate of inflation in September, matching the commitment made by the UK Government.

This has resulted in significant hikes in cost of benefits, with the cost of the adult disability payment rocketing from £1.95bn to £2.7bn, and the Child Disability Payment increasing from £265m to £327m for the coming financial year.

The doubling of the Scottish Child Payment to £25 per child also means more than £440m will be spent on that promise.


Ferguson Marine received an additional £72m to help finish the late ferries, which will now cost more than £300m in total.

In a significant move to help bring travellers back to the railways, £15m is also being provided to run a pilot project where peak time fares will be removed from ScotRail for six months.


One of the loudest sectors which begged for money ahead of this Budget, the justice portfolio will see an increase of around £120m for the coming year. This is predominately from an £81m increase to the police budget, now worth £1.45bn, and an additional £13m to the Scottish Courts and Tribunal Service.

Prisons have also received a major boost of around £64m. The Crown Office will also receive an additional £24.2m.

What was not in the Budget

There was no room for a public sector pay policy for 2023/24. This leaves the door wide open leading into the New Year for the Government to negotiate this year’s pay deals with NHS staff and teachers, before setting out whether it can provide for inflation-busting pay deals next year.

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This is the biggest unknown in this Budget. If the pay policy, when published, is substantially lower than inflation, expect yet more strike action from the public sector in the new financial year.

Independence was also struck a blow, at least in the short term. Mr Swinney announced the much maligned £20m fund for a referendum in October 2023 would be reprioritised. Instead of funding a new vote, it will be used to extend a £20m fuel insecurity fund.

What has been cut

Several funding areas have seen significant hits. The budget for motorway and trunk road funding has been cut by £75m, £57m has gone from the Enterprise budget and £66m from the Cities Investment and Strategy and Regeneration budgets. Housing budgets have also been hit hard, with a cut of £166.4m.

In real terms, the impact is stark. Inflation has hit budgets so hard that a £1.9bn increase in health funding between 2021/22 and 2023/24 is in real terms an increase of less than £500m.

The finance and economy, education and skills, net zero, rural affairs, constitution, and Deputy First Minister and Covid recovery portfolio budgets are all lower in real terms in this Budget when compared to 2021/22. All of this will impact the quality of public services.

Overall, the total managed expenditure of Government in real terms has risen just £96m since 2021/22, rising from £57.844bn to just £57.940bn on 2022/23 prices. The challenge for government to maintain public services in that financial context is stark.

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