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• No change to working peoples payslips as employee national insurance and VAT stay the same, but businesses and the wealthiest asked to pay their fair share.
• Record 47.7 billion for the Scottish Government in 2025/26 includes 3.4 billion through the Barnett formula.
• Funding for Green Freeports, City and Growth Deals, GB Energy and hydrogen projects to fire up growth and deliver good jobs across Scotland.

The Chancellor has delivered a Budget to fix the foundations to deliver on the promise of change after a decade and a half of stagnation. She set out plans to rebuild Britain, while ensuring working people across Scotland dont face higher taxes in their payslips.

The UK Government was handed a challenging inheritance; 22 billion of unfunded in-year spending pressures, debt at its highest since the 1960s, an unrealistic forecast for departmental spending, and stagnating living standards.

This Budget takes difficult decisions to restore economic and fiscal stability, so that the UK Government can invest in Scotlands future and lay the foundations for economic growth across the UK as its number one mission.

The Chancellor announced that the Scottish Government will be provided with a 47.7 billion settlement in 2025/26 the largest in real terms in the history of devolution. This includes a 3.4 billion top-up through the Barnett formula, with 2.8 billion for day-to-day spending and 610 million for capital investment.

Secretary of State for Scotland Ian Murray said:

This is a historic budget for Scotland that chooses investment over decline and delivers on the promise that there would be no return to austerity.

It is the largest budget settlement for the Scottish Government in the history of devolution, including an additional 1.5 billion this financial year and an additional 3.4 billion next year through the Barnett formula. That money must reach frontline services, to bring down NHS waiting lists and lift attainment in our schools.

It will also bring a new era of growth for Scotland and the whole UK, confirming nearly 890 million of direct investment into Freeports, Investment Zones, the Argyll and Bute Growth Deal, and other important local projects across Scotlands communities, as well as 125 million next year for GB Energy and support for green hydrogen projects in Cromarty and Whitelee.

The increase in the minimum wage will also mean a pay rise for hundreds of thousands of workers in Scotland, with the biggest increase for young workers ever. This is on top of our employment rights bill which will deliver the biggest upgrade in workers rights in a generation. The triple lock means an increase in the state pension by 470 next year, on top of 900 this year for a million Scottish pensioners.

The budget protects working people in Scotland, delivers more money than ever before for Scottish public services and means an end to the era of austerity.

Protecting working people and living standards

While fixing the inheritance requires tough decisions, the Chancellor has committed to protecting the living standards of working people. The decisions taken by the Chancellor to rebuild public finances enable the UK Government to deliver on its pledge to not increase National Insurance or VAT on working people in Scotland, meaning they will not see higher taxes in their payslip.

• The National Living Wage will increase from 11.44 to 12.21 an hour from April 2025. The 6.7% increase worth 1,400 a year for a full-time worker is a significant move towards delivering a genuine living wage.
• The National Minimum Wage for 18 to 20-year-olds will also see a record rise from 8.60 to 10 an hour.
• Working people will benefit from these increases, with there estimated to be over 100,000 minimum wage workers in Scotland in 2023.
• The Chancellor has made the decision to protect working people in Scotland from being dragged into higher tax brackets by confirming that the freeze on National Insurance Contributions thresholds will be lifted from 2028-29 onwards, rising in line with inflation so they can keep more of their hard-earned wages.
• The Chancellor is also protecting motorists by freezing fuel duty for one year - a tax cut worth 3 billion, with the temporary 5p cut extended to 22 March 2026. This will benefit an estimated 3.2 million people in Scotland, saving the average car driver 59, vans 126 and Heavy Goods Vehicles 1,079 next year.
• To support Scottish pubs and smaller brewers in Scotland, the UK Government is cutting duty on qualifying draught products by 1p, which represent approximately 3 in 5 alcoholic drinks sold in pubs. This measure reduces duty bills by over 70 million a year, cutting duty on an average strength pint in a pub by a penny. The relief available to small producers will be updated to help smaller brewers and cidermakers.
• Over 1 million Scottish pensioners will benefit from a 4.1% increase to their new or basic State Pension in April 2025. This is an additional 470 a year for those on the new State Pension and an additional 360 a year for those on the basic State Pension.
• Households eligible for Pension Credit will get 465 a year more for single pensioners and up to 710 a year more for couples due to a 4.1% increase in the Pension Credit Standard Minimum Guarantee, benefitting 125,000 pensioners in Scotland.
• Around 1.7 million families in Scotland will see their working-age benefits uprated in line with inflation a 150 gain on average in 2025-26.
• Reducing the maximum level of debt repayments that can be deducted from a households Universal Credit payment each month from 25% to 15% will benefit a Scottish family by over 420 a year on average.

Rebuilding Britain

This UK Government will not make a return to austerity and will instead boost investment to rebuild Britain and lay the foundations for growth in Scotland. This includes 130 million of targeted funding for the Scottish Government, of which 120 million is in capital investment.

• The Budget delivers on the first step to establish Great British Energy by providing 125 million next year to set up the institution at its new home in Aberdeen - helping to develop new clean energy projects in Scotland and across the UK.
• The UK Government will deliver 122 million for City and Growth Deals, including the continuation of its contribution to the Argyll and Bute Growth Deal which delivers 25 million of investment in the region over 10 years. This Deal will be supported by a rigorous value for money assessment as part of the review of the business cases for projects within it, to ensure best value is being delivered.
• The Budget gives certainty to local leaders and investors, confirming funding for the Investment Zones and Freeports programmes across the UK - including Scotlands Green Freeports.
• The Chancellor committed the UK Government to working closely with the Scottish Government on the Industrial Strategy, 10-year infrastructure strategy and the National Wealth Fund - to ensure the benefits of these are felt UK-wide and as part of the relationship reset between governments. These will mobilise billions of pounds of investment in the UKs world-leading clean energy and growth industries.
• To support economic growth and promote Scottish culture, products and services through diplomatic and trade networks, the UK Government is allocating 750,000 for the Scotland Office in 2025/26 to champion Brand Scotland as was committed in the manifesto.
• We are supporting Scotlands world-renowned Scotch Whisky industry by providing up to 5 million for HMRC to reduce the fees charged by the Spirit Drinks Verification Scheme and by ending mandatory duty stamps for spirits on 1 May 2025.
• Two electrolytic hydrogen projects in Scotland have been selected for UK Government revenue support through the first Hydrogen Allocation Round: Cromarty Green Hydrogen Project and Whitelee Green Hydrogen. Both projects will bring in significant international investment and create good quality, local jobs.
• An extension of the Innovation Accelerators programme will support the high-potential innovation cluster in the Glasgow City Region.
• A corporate tax roadmap will provide businesses with the stability and certainty they need to make long-term investment decisions and support our growth mission. It confirms our competitive offer, with the lowest Corporate Tax rate in the G7 and generous support for investment and innovation.
• The UK Government will also proceed with implementing the 45%/40% rates of the theatre, orchestra, museum and galleries tax relief from 1 April 2025 to provide certainty to businesses in Scotlands thriving cultural sector.

Repairing public finances

The Chancellor has made clear that, whilst protecting working people with measures to reduce the cost of living, there would be difficult decisions required. The Budget will ask businesses and the wealthiest to pay their fair share while making taxes fairer. This will go directly towards fixing the foundations of the UK economy.

• The rate of Employers National Insurance will increase by 1.2 percentage points, to 15%. The Secondary Threshold the level at which employers start paying national insurance on each employee
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