Devil in the detail – Everything solicitors need to know about Scottish Budget from mansion tax to legal aid

Finance secretary Shona Robison’s final Scottish Budget goes under the microscope, as Peter Ranscombe explores the reaction.

Economists criticised the Scottish Government’s Budget for burying details not covered in outgoing finance secretary Shona Robison’s speech. João Sousa, deputy director of the University of Strathclyde’s Fraser of Allander Institute, said: “The devil was very much in the detail and in what wasn’t said by Shona Robison.

“Relative to plans laid out in June, the Finance Secretary has had to cut day-to-day spending by £480 million, largely due to much weaker underlying tax forecasts from the Scottish Fiscal Commission. This was on top of further uses of exceptional items and non-recurring revenues in the region of £300 million. This Budget, then, was another example of the Scottish Government plugging an underlying deficit of over half-a-billion pounds with one-off funding pots – and even then having to make significant cuts to its planned expenditure.”

David Phillips, head of devolved and local government finance at the Institute for Fiscal Studies (IFS), added: “The Budget document continues to bury the most appropriate spending figures in an annex, with the main body including figures for this year and next that just cannot be meaningfully compared – a recipe for confusion. That isn’t good enough – especially in an election year, when the electorate deserve a clear picture of how tax and spending are changing.”

Their criticisms came as the Law Society of Scotland sought “urgent clarification” on why the legal aid budget is rising by just 3%, which “doesn’t even match inflation”, despite cross-party support for a larger increase. “The finance secretary speaks about ‘delivery and hope’, yet the Scottish Government has failed on both counts for people who can’t afford the legal help they need,” warned law society president Patricia Thom.

Calls to reform ‘broken’ rates

Business groups warned the Scottish Budget didn’t “go far enough”. While the Federation of Small Businesses (FSB) Scotland recognised reliefs from non-domestic rates – often called business rates – would help some firms, its chair, Guy Hinks, added: “Given the extent of the increases small businesses are facing, with rises of up to 400%, this is effectively a drop in the ocean.”

Michelle Ferguson, director of CBI Scotland, added: “Tinkering around the edges fails to tackle the fundamental problem: that the system as a whole is broken. Firms desperately want a comprehensive review of non-domestic rates, not added complexity, to avoid further damage to investment, profitability, job creation and stalled growth.”

Scottish Tourism Alliance chief executive Marc Crothall noted: “The introduction of transitional relief, reductions to the basic and intermediate rates, and the modest 15% of non-domestic rates relief for retail, hospitality and leisure businesses will provide temporary breathing space for some, but not nearly enough to prevent potential closures and job losses. Without decisive reform, the consequences of continued uncertainty will be felt within and far beyond our sector.”

The Scottish Government is following developments south of the Border to see if Chancellor Rachel Reeves will offer business rates relief for pubs. Paul Togneri, senior advisor to the Scottish Beer & Pub Association, said: “Any commitment by the UK Government to pass on support to the sector in England must be passed on in full for pubs and bars in Scotland, and all eyes will be on what further support is coming down the track.”

Questions over who has ‘broad shoulders’

The finance secretary increased the thresholds for both the 19% “basic” and 20% “intermediate” income tax rates by 7.4%. “This was a significant increase, but it still keeps the difference for taxpayers below the median income at a maximum of £40 a year, or 75p a week,” noted the Fraser of Allander Institute, with Labour’s shadow finance secretary Michael Marra likening the amount to “a Mars bar a week” on BBC Radio Scotland’s breakfast show.

Yet Neil Winstanley, an Edinburgh-based chartered financial planner at Quilter Cheviot, warned: “It does little to address the growing number of public sector workers – including nurses, teachers and police officers – who are now being pulled into the 42% higher rate. These are not the ‘broadest shoulders’ traditionally associated with higher-rate tax, yet fiscal drag continues to push more ordinary earners into this bracket.

“Higher-rate taxpayers are therefore likely to be disappointed that their threshold has again been left unchanged and now lags the rest of the UK by around £7,000. For someone earning £50,000, that difference equates to roughly £1,500 a year in extra tax, a gap that is becoming increasingly hard to ignore and risks undermining Scotland’s competitiveness for skilled workers over time.”

The CBI agreed: “Continuing tax divergence from the rest of the UK – particularly for middle earners up – leaves firms unable to recruit highly-skilled employees from across the UK and beyond and risks pushing even more talent south. The government must commission an independent review of its uncompetitive tax strategy.”

Two additional council tax bands for properties worth more than £1 million will be introduced from April 2028, with local councils setting rates. Charlene Young, a senior pensions and savings expert at stockbroker AJ Bell, noted the tax is “estimated to affect fewer than 1% of Scottish households”, adding: “Although this might appear tougher than the England and Wales mansion tax, it is unlikely to raise much in the way of extra revenue for Scottish councils and is more about the message and optics of moving to what the Scottish National Party views as a fairer system.”

Help for working parents – but a ‘wasted opportunity’

Away from taxes, the Scottish Government also unveiled plans for more breakfast clubs and after-school activities – working parents often warn that the high cost of childcare prevents them from increasing their hours. But campaigners warned the Scottish Budget was a “wasted opportunity” when it came to tackling childhood poverty.

John Dickie, director of Child Poverty Action Group in Scotland, said: “The promise to increase the Scottish child payment for babies under one is a positive step but won’t kick in for over a year and even then leaves the vast majority of children without any additional financial support. More breakfast clubs, after school and holiday activities will be welcome for families but with 2030 targets looming the opportunities wasted today should ring alarm bells for all those who want to see child poverty eradicated.”

Charis Chittick, head of policy at One Parent Families Scotland, added: “This long-awaited budget lacks ambition. This is a missed opportunity to invest in the future of our children. We are deeply concerned that the Scottish Government has failed to increase the Scottish child payment beyond the statutory requirement.”