Hm Treasury
Under the Fiscal Framework agreed between the UK and Scottish Governments in 2016 and reviewed in 2023, the Scottish Governments funding is initially based on forecasts of Income Tax and updated once actual Income Tax revenues are available.
Actual Income Tax data for 2022-23 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 2022-23 can now be undertaken as HMRC have published 2022-23 Income Tax outturn data and the Office for National Statistics (ONS) and National Records of Scotland have published revised population estimates that affect the calculation of the Block Grant Adjustment:
- Scottish Income Tax receipts are higher than forecast at the time of the 2022-23 Scottish Budget so this will increase Scottish Government self-funding by 1498 million in 2025-26
- The associated Block Grant Adjustment is also higher than forecast at the time of the 2022-23 Scottish Budget so this will reduce Scottish Governments block grant funding by 1050 million in 2025-26
- The net effect is a 449 million increase in the Scottish Governments overall funding for 2025-26.