Scottish Budget: Employers’ Update


Chris Campbell

Chris Campbell

Tax Senior Manager


In keeping with the strategies laid out in the SNP manifesto, in the 2017/18 draft Scottish Budget, Finance Secretary Derek Mackay announced his plan to maintain the higher rate income tax threshold of £43,430 for 2017/18, whereas in the rest of the UK, this will rise to £45,000. Those fully affected will pay £314 more in income tax than taxpayers in other parts of the UK. It will also impact on the notices of coding for employees who pay tax in both Scotland and the rest of the UK.

The UK Government will press ahead with plans to fund apprenticeships via the introduction of a 0.5% levy on an employer’s wage costs in excess of £3 million per year from April 2017. Accordingly, the levy will only apply to UK employers with annual salary levels of more than £3 million, which means an estimated 2% of employers. Businesses should be aware that the levy will apply across all sectors, regardless of whether their organisation engages apprentices. 

Details were also announced in the draft Budget about how proceeds from the levy will be applied, including for the expansion of Modern Apprenticeship opportunities to 30,000 new starts each year by 2020, alongside an increase in the number of graduate level and foundation apprenticeships during 2017/18.

At present, a levy paying employer with employees located in England will be able to set up a digital apprenticeship service account from next month.  This account contains funds which can be spent on apprenticeships in England.  The money available to spend in the digital apprenticeship service account is determined by the number of current employees of a given employer who live in England. 

No such facilities have been announced for Scottish based apprenticeships as yet, and the detail on how the Scottish Government intends to use the funding remains to be seen. However relevant business may wish to start considering how they might be able to capitalise on the potential funding opportunities.

We will keep you updated as soon as we are aware of any further detail.