Income Tax Reconciliations

The Scottish Budget is set in advance of each financial year, based in part on SFC and OBR forecasts of income tax revenue which are used to set the Block Grant Adjustment (BGA).

Outturn information becomes available over two years later. This information allows forecast errors for both the BGA and tax revenue to be calculated. Considering together the effect of these forecast errors on the Scottish Budget leads to a reconciliation.

Scottish income tax outturn information will now become available each summer, and each release will cause an income tax reconciliation to be calculated. This creates an ongoing reconciliation process, which will apply every year.

The latest income tax reconciliation, worth -£309 million was applied to the 2021-22 Budget, related to income tax raised in 2018-19. The following diagram shows how this reconciliation was calculated.