Income Tax Reconciliations

The Scottish Budget is set in advance of each financial year, based in part on Scottish Fiscal Commission (SFC) and Office for Budget Responsibility (OBR) forecasts. The SFC’s forecast sets the amount of Scottish income tax revenues to be transferred to the Scottish Government. The OBR’s are used to set the Block Grant Adjustment (BGA).

Outturn data become 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 result in an income tax reconciliation. This creates an ongoing 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.

Income Tax Reconciliations