London Daily

Focus on the big picture.
Friday, Sep 12, 2025

What the mini-budget means for Scotland

What the mini-budget means for Scotland

We've had three changes of prime minister in six years, each one setting out to refresh the Conservative government. Kwasi Kwarteng has served notice with his mini-budget that this is a more radical reversal and change of direction than we've seen before.

There are very big commitments to cut tax - rising from £4 billion to nearly £45 billion four years from now - with very few indications of how it is to be paid for.

The intention is to boost the growth path of the economy, and if that means more people making and spending more money, there should be a consequent rise in revenues with which to sustain spending levels.

That is a gamble, and it is all the riskier to be doing this while the economy is probably already in recession, business and consumer confidence is low, and unleashing tax cuts runs contrary to the efforts of the Bank of England to bring inflation under control with higher interest rates.

Several of the chancellor's measures will affect Scots, including the reversal of April's National Insurance increase for employers and employees, and retention of the corporation tax rate.

Scotch whisky distillers and brewers will welcome an end to planned reforms of alcohol duty. Retailers are pleased to see a new system to boost VAT-free shopping by foreign tourists. Reversal of tax reforms for self-employed people will also cover the whole UK.

But big elements will not apply in Scotland, including the cut in additional rate income tax from 45% to 40% on earnings above £150,000. The rate in Scotland remains at 46%.

A cut in basic rate tax from 20p in the pound to 19p does not apply in Scotland. The basic rate has different thresholds for Scottish taxpayers.

The chancellor's stamp duty cut for property transactions applies in England and Northern Ireland, while Scotland and Wales have different systems, which are diverging even more as the Treasury opts to raise the threshold at which transaction tax starts to be paid.

Holyrood ministers must decide how to use any extra money


What this will mean for Holyrood is an increase in block grant from the Treasury, of £630m spread over this year and the next two financial years.

A tax cut that doesn't apply to Scots is treated by the Treasury as a giveaway to non-Scottish individuals, and a proportionate share of that giveaway is handed to Holyrood, for Scottish ministers to deploy as they choose.

The effect of cutting basic rate income tax for the rest of the UK is a boost for Holyrood of £340m over next financial year and the year after.

A small part of the extra funds are added this year due to the immediate introduction of reduced property transaction tax in England and Northern Ireland. That element adds up to £170m over three years.

Some £120m is in lieu of the reduction in top rate income tax, which is cutting the tax bill for the average non-Scots high earner by £10,000. That widens the gap between Scots and non-Scots high earners, when Scots already pay higher tax rates above £50,000.

What can Holyrood ministers do with that money? They can cut tax in similar ways or different ways, or they can use that money to spend on different priorities.

A further reform of tax is in Investment Zones, going further than freeports to offer tax breaks on National Insurance, business rates and transactions tax.

The Treasury is already talking to councils in 38 areas of England about gaining that advantage, and it says it will also deploy this approach in Scotland, Wales and Northern Ireland.

As with freeports, it does not have control over several of the measures promised in England - business rates, property transaction tax, planning and some regulation. But it will challenge devolved administrations to join in or lose out.

There was little indication from Mr Kwarteng of a squeeze on spending to help pay for nearly £45bn of tax cuts, so the implication is of a big increase in borrowing and to both the annual deficit and Britain's pile of debt. Spending cuts may be for another day.

Newsletter

Related Articles

0:00
0:00
Close
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
Starmer Establishes Economic ‘Budget Board’ to Centralise Policy and Rebuild Business Trust
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Brazilian police say ex-President Bolsonaro had planned to flee to Argentina seeking asylum
Trinidad Leader Applauds U.S. Naval Strike and Advocates Forceful Action Against Traffickers
Kim Jong Un Oversees Final Test of New High-Thrust Solid-Fuel Rocket Engine
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Supreme Court temporarily allows Trump to pause billions in foreign aid
Charlie Sheen says his father, Martin Sheen, turned him in to the police: 'The greatest betrayal possible'
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
Pig Heads Left Outside Multiple Paris Mosques in Outrage-Inducing Acts
Nvidia’s ‘Wow’ Factor Is Fading. The AI chip giant used to beat Wall Street expectations for earnings by a substantial margin. That trajectory is coming down to earth.
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
On the Anniversary of Queen Elizabeth’s Death: Prince Harry Returns to Britain
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Murdoch Family Finalises $3.3 Billion Succession Pact, Ensuring Eldest Son’s Leadership
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Court Staff Cover Up Banksy Image of Judge Beating a Protester
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
Elon Musk Poised to Become First Trillionaire Under Ambitious Tesla Pay Plan
France, at an Impasse, Heads Toward Another Government Collapse
Burning the Minister’s House Helped Protesters to Win Justice: Prabowo Fires Finance Minister in Wake of Indonesia Protests
Brazil Braces for Fallout from Bolsonaro Trial by corrupted judge
The Country That Got Too Rich? Public Spending Dominates Norway Election
Nearly 40 Years Later: Nike Changes the Legendary Slogan Just Do It
Generations Born After 1939 Unlikely to Reach Age One Hundred, New Study Finds
End to a four-year manhunt in New Zealand: the father who abducted his children to the forests was killed, the three siblings were found
Germany Suspends Debt Rules, Funnels €500 Billion Toward Military and Proxy War Strategy
EU Prepares for War
BMW Eyes Growth in China with New All‑Electric Neue Klasse Lineup
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
US Justice Department Launches Criminal Mortgage-Fraud Probe into Federal Reserve Governor Lisa Cook
Escalating Drug Trafficking and Violence in Latin America: A Growing Crisis
US and Taiwanese Defence Officials Held Secret Talks in Alaska
Report: Secret SEAL Team 6 Mission in North Korea Ordered by Trump in 2019 Ended in Failure
×