Scottish Aggregates Tax

The Scotland Act 2016 provides the Scottish Parliament with the power to introduce a devolved tax to replace the UK Aggregates Levy. The Scottish Government has proposed the introduction of the Scottish Aggregates Tax (SAT). It is the intention of the Scottish Government that SAT become effective from 1 April 2026.

In September 2022, the Scottish Government published a consultation seeking views on how a devolved aggregates tax should be structured and operate. This public consultation – Breaking New Ground? Developing a Scottish tax to replace the UK Aggregates Levy – ran to late December 2022.

MPA Scotland in it’s response requested that the Scottish Government give consideration to establishment of a working group. The Scottish Government stated they were keen to ensure that the Scottish Aggregates Tax is developed collaboratively with stakeholders.

The Scottish Aggregates Tax Advisory Group was convened in March 2023 to support further and give more detailed consideration of several policy issues. MPA Scotland have played an active role within the Advisory Group.

The Scottish Government has stated that it intends to continue to convene meetings of the group, together with Revenue Scotland, to support the implementation of SAT.

MPA Scotland strongly supports this approach. In addition, MPA Scotland has proposed that a relevant working group should be retained post implementation, including to assist with compliance issues. MPA Scotland commits to engaging with Revenue Scotland and the Scottish Government to ensure that the devolution of the tax goes smoothly. It is essential that markets are not distorted and that Scottish aggregates producers can compete fairly.

The Aggregates Tax and Devolved Tax Administration (Scotland) Act 2024 was introduced to the Scottish Parliament in November 2023 and approved by the Scottish Parliament in October 2024. The legislation received Royal Assent and became an Act of the Scottish Parliament on 12 November 2024.

The Scottish Government are currently considering matters in relation to the required secondary legislation.

We caution against overestimating the environmental or behaviour changes that might result from changes to the tax following devolution. In particular, the Scottish Government’s desire to use the Aggregates Tax to drive increased recycling and circularity is unlikely to be realised.

There is only a finite volume of construction and demolition waste to be used as recycled aggregates, 87% of which is already used in this way. There is little scope to significantly increase this as much of the remaining 13% is silt and other soft wastes that are not recyclable into useable products. Recycled aggregates need to meet specific standards and specifications to be useable.

MPA Scotland commits to engage with Revenue Scotland and the Scottish Government to make the devolution of the tax go smoothly.

It is essential that markets are not distorted, and that Scottish aggregates producers can compete fairly.

Recommendations

• Scottish Government should proceed with caution in devolving the tax, avoiding market-distorting differences with the rest of the UK
• Scottish Government and Revenue | Scotland should retain the Scottish Aggregates Tax Business Advisory Group through the primary and secondary legislation period and into post-implementation