GovWire

Under the fiscal framework agreed between the UK and Scottish governments in 2016, the Scottish Governments funding is initially based on forecasts of Income Tax and updated once actual Income Tax revenues are available.

In short, actual Income Tax data for 2020-21 replaces forecasts of Scottish Income Tax (made by the Scottish Fiscal Commission) and forecasts of the associated block grant adjustment (based on forecasts of UK Government Income Tax made by the Office for Budget Responsibility).

This reconciliation process for 2020-21 can now be undertaken as HMRC have published 2020-21 Income Tax outturn data today:

• Scottish Income Tax is lower than forecast at the time of the 2020-21 Scottish Budget so this will reduce Scottish Government self-funding by 417 million in 2023-24
• The associated block grant adjustment is also lower than forecast at the time of the 2020-21 Scottish Budget (driven by lower than forecast Income Tax revenue for the rest of the UK) so this will increase Scottish Governments block grant funding by 468m in 2023-24
• The net effect is a 50 million increase in the Scottish Governments overall funding for 2023-24.