The Government has agreed a block grant adjustment mechanism through the operation of the Barnett formula with the Scottish Government in relation to the Scottish rate of income tax.<\/p>
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During two or three transitional years, the deduction will reflect the tax generated by a Scottish rate of 10p. Following this transitional period, the first year deduction will again reflect the tax generated by a Scottish rate of 10p, and then in subsequent years this deduction will be indexed against growth in the UK non-savings non-dividend income tax base.<\/p>
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The Scottish Government\u2019s overall funding will therefore be partly determined by the relative growth in the Scottish and UK non-savings non-dividend income tax base.<\/p>
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