Call for Views: Pre-Budget Scrutiny 2027-28

The ATT has responded to the Scottish Parliament's Finance and Public Administration Committee's call for views on its 2027-28 Pre-budget work on the affordability and sustainability of Scotland’s tax and spending plans. In our response, we drew attention to the ATT's priorities for next Scottish Parliament, published jointly with the Chartered Institute of Taxation and the Low Incomes Tax Reform Group ahead of the Scottish Parliament election in May 2026. 

Without commenting on tax rates, we suggested that a key priority is the need for greater understanding on the impact Income Tax divergence from the rest of the UK may have on Scotland’s appeal as a place to live, work and do business. This will be particularly relevant when the Scottish Government uses its new powers to decide whether to follow the rest of the UK and set new tax rates on property income from April 2027. 

We noted that the Scottish Government may need to consider the interaction of areas of Income Tax policy not currently devolved, such as the Personal Allowance.

We also highlighted the need for effective Council Tax reform in Scotland and suggested that the Finance and Public Administration Committee has an important role to play in bringing about the necessary political consensus needed to achieve meaningful reform, rather than simply introducing additional Council Tax bands or making minor adjustments to the existing system.

In respect of risks to devolved tax revenues, we suggested that the main risks include compliance and increased complexity with the relevant tax legislation and ensuring that individuals and organisations are paying the correct tax in a timely manner. We recommended that the Committee consider the recommendations of the Land and Buildings Transaction Tax review working group, on which the ATT was represented.

Finally, as more devolved taxes become operational, we stressed the importance of improved scrutiny of devolved taxes in Scotland. We felt that introducing a regular Scottish Tax Bill could allow the Scottish Parliament to update tax laws more efficiently, but recognised the advantages of the Scottish Government setting up a successor group to the Tax Advisory Group and reconvening and revisit the work of the Devolved Taxes Legislation Working Group, which has not met for several years.