Income tax shortfall

Forecasting can be a tricky art, and the Scottish government will now have to manage a £204m reduction in expected funds next year. The loss is due to a £941m gap in the expected receipts (forecast) from income tax receipts in 2017/18. Under a risk-sharing mechanism the Scottish government will get an extra £737m to cover its budget, but it will have to cover the shortfall.

Scottish income tax revenue increased by £197m between 2016/17 and 2017/18 to £10.bn (an increase of 1.8%). The forecast set out in the draft budget for 2017/18 had been £11.8bn.

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