Scottish Budget 2025-26: What it means for small businesses

Deputy first minister and finance secretary Shona Robison has set out the Scottish government's proposed spending and tax plans for 2025-26.

Here are the measures announced in the Scottish Budget that are relevant for small businesses and the self-employed.

Income tax

Following the introduction of a new income tax band in last year's Scottish Budget, no changes to income tax rates were announced in the 2025-26 Budget.

Changes were made to some thresholds, the point at which people pay income tax. The starter rate band will increase by 22.6% and the basic rate band by 6.6%. The government said that the effect of this will be to increase the thresholds at which taxpayers pay the basic rate and intermediate rate by 3.5%.

Business rates

The basic property rate, which is charged to properties with a rateable value up to £51,000, will be frozen at 49.8p.

Other rates will rise by inflation: the intermediate property rate (properties with a rateable value of between £51,001 and £100,000), will be 55.4p, and the higher property rate (properties with a rateable value above £100,000) will be 56.8p.

A 40% business rates relief will be provided to properties in the hospitality sector (including grassroots music venues with a capacity of up to 1,500) which are liable for the basic property rate, capped at £110,000 per business.

A 100% relief will continue to be provided to hospitality premises (including grassroots music venues with a capacity of up to 1,500) located on islands as defined by the Islands (Scotland) Act 2018, and in three prescribed remote areas (Cape Wrath, Knoydart and Scoraig), capped at £110,000 per business.

Other business rates relief schemes, including the small business bonus scheme, day nursery relief and fresh start relief, will be maintained.

UK Hospitality Scotland executive director Leon Thompson said:

"The introduction of 40% business rates relief is very positive for venues that are eligible for this support.

"With costs mounting for venues across Scotland, this support could be a lifeline for some businesses making tough decisions about whether to invest, take on more staff, or even shutting the doors for good.

"Freezing the basic property rate and providing 100% relief for businesses on the islands are also positive measures that will help to ease the cost burden on the sector.

"However, there are around 2,600 businesses that will not be eligible for relief -- they face a double-whammy of increased employer taxes and an inflationary rise in their higher level of business rates in April.

"Hospitality's ability to provide jobs for everyone is one of our impactful contributions to Scotland and I am concerned about the unintended consequences those tax rises will have on the ability of those unsupported businesses to support employment."

Business support

Funding of £15m will be provided to support entrepreneurs, including £4m "to expand the number of women entrepreneurs by providing tailored support at the earliest stages of business creation".

The Scottish government will provide continued investment in Techscaler, its flagship programme for tech start-ups.

There will be a new round of the Ecosystem Fund, which supports organisations and activities that facilitate the growth of Scottish small businesses, and a new fund to further develop clusters in sectors such as life sciences, digital and advanced manufacturing.

Funding of £321m will be provided to enterprise agencies to deliver the Scottish government's programme of small business support.

Over £660m in support will be provided to Scottish farmers, crofters, land managers and rural communities, including continued direct payments to the sector and investing in transforming support for farming and food production in Scotland.

Funding of £14.5m will be provided for the Marine Fund Scotland to support innovation in the marine industries.

The government will "revitalise and expand" the Rural Tourism Infrastructure Fund (RTIF) to "provide critical economic support to tourist hotspots across the country such as Aviemore, Glencoe and Moray".

Business funding

The Scottish National Investment Bank will be provided with £200m to "to ensure continuation and advancement of work to create jobs, support innovation and attract investment".

The bank typically supports businesses and projects seeking more than £1m in debt or equity investment.

Culture and heritage

Funding of £34m will provided to support culture and heritage, taking the total incremental increase to date to £50m. This is halfway towards the Scottish government's commitment to invest at least £100m more in arts and culture by 2028‑29 which it made at its party conference in October 2023.