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 -£34 million was applied to the 2022-23 Budget, related to income tax collected in 2019-20. The following diagram shows how this reconciliation was calculated.

Find out more in our Analytical Papers series, including our Occasional Papers and Forecast Evaluation Reports.

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Or read our December 2021 Scotland’s Economic and Fiscal Forecasts report.

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