Scotland’s Finance Secretary Derek Mackay has announced the draft Scottish Budget for 2019-20 – here’s what it means for small businesses.
Mackay’s speech focused on making provisions for Brexit, which he said might impact on spending plans depending on the eventual outcome.
The headline for small businesses is a ‘generous’ package of business rates relief worth more than £750 million, the Scottish government claims.
There’s also a Town Centre Fund, as well as the announcement that income tax rates are staying the same as last year. Read on for more.
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‘Generous’ business rates relief worth more than £750 million
Derek Mackay used his Budget speech to announce what the Scottish government has called ‘the most generous package of business rates relief in the UK’, worth more than £750 million in 2019-20, he claims.
Mackay said that he’s capping increases in business rates below inflation, so 90 per cent of properties and all SMEs will pay a lower poundage than in other parts of the UK.
Freeze in the higher rate of income tax threshold
Mackay confirmed that income tax rates will stay the same as last year, which means that 99 per cent of taxpayers won’t see an increase in what they pay.
But the starter and lower rate thresholds will be increased in line with inflation, which Mackay says should protect the lowest earners.
The higher rate threshold will be frozen. The Scottish government claims that 55 per cent of Scottish taxpayers will pay less income tax than other parts of the UK, and that their income tax powers free up £68 million of additional revenue to invest in ‘essential’ public services.
A Town Centre Fund
The Scottish government has also announced a Town Centre Fund – £50 million to support Scotland’s small businesses.
Prior to the Budget speech, Aberdeen City Council asked for £20 million to help struggling businesses stay afloat, so Mackay’s announcement should hopefully spell good news for Scottish high streets.
£5 billion to make Scotland a more attractive place to do business
The Finance Secretary acknowledged that greater investment in infrastructure makes Scotland a more attractive place to do business, boosting productivity, while also improving quality of life.
In light of this, Mackay announced £5 billion in capital spending over the next year.
Future-proofing the success of export businesses
Whatever happens with Scotland’s relationship with the EU, the government wants to make sure the country’s export businesses are supported through any transition.
The Budget, therefore, provides for £20 million to help them adjust to change and make the most of opportunities.
Other key Scottish Budget 2018 announcements
- An extra £730 million of investment in health and care services
- £825 million of investment in affordable housing across Scotland
- £275 million to help make Scotland a low carbon country
- £8 million for a National Manufacturing Institute for Scotland
- £52.3 million to make sure no one in Scotland pays the Bedroom Tax
- GDP growth forecast at 1.4% in 2018, 1.2% in 2019, 1% in 2020 and 2021, 1.1% in 2022 and 1.2% in 2023
Getting the Budget through parliament
The SNP government may have come up with its plan for Scotland’s finances over the next year, but it still needs to get them through the final vote, which is expected to happen in February.
Being a minority administration means they need votes from other parties to get their Budget passed.
While the Greens have been helpful on this front in the past, they’re reluctant this year until they see some commitment to major reform of local government funding. The Lib Dems, too, want confirmation that the SNP won’t push for another independence referendum before they’ll even consider backing the Budget, reports the BBC.