Changes to Aggregates Levy legislation in preparation for devolution to Scotland
Published 26 November 2025
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This publication is available at https://www.gov.uk/government/publications/aggregates-levy-devolution-to-scotland/changes-to-aggregates-levy-legislation-in-preparation-for-devolution-to-scotland
Who is likely to be affected
Quarrying and other businesses supplying or using construction aggregates in Scotland or those supplying aggregates to Scotland from England, Wales or Northern Ireland.
General description of the measure
The Scottish government will introduce the Scottish Aggregates Tax from 1 April 2026, which will apply to aggregate produced or used in Scotland. Aggregates Levy will continue to apply to aggregate produced or used in England, Wales and Northern Ireland.
This measure makes legislative changes to Aggregates Levy in preparation for devolution so that aggregates producers who supply taxable aggregate across the Scottish border in either direction will be responsible for paying the tax of the destination country.
Policy objective
The objective of the measure is to support the introduction of the devolved Scottish Aggregates Tax.
The changes seek to minimise complexity and prevent businesses which had not previously been within scope of Aggregates Levy from becoming liable to the tax. It also makes changes to avoid double taxation on aggregate supplied cross-border by middlemen in a supply chain, such as builders’ merchants, by ensuring that aggregate which has had the Scottish Aggregates Tax paid on it in Scotland will not be liable to Aggregates Levy if it is further supplied to England, Wales or Northern Ireland.
Background to the measure
The devolution of Aggregates Levy follows a recommendation in the Smith Commission report in 2014 to devolve further powers to the Scottish Parliament.
The Scotland Act 2016 gave the Scottish Parliament the power to introduce a replacement tax for Aggregates Levy in Scotland, while disapplying the Levy in Scotland from a future date to be determined by the Treasury.
The Scottish government and Revenue Scotland consulted on and developed a new tax to replace Aggregates Levy in Scotland. The Aggregates Tax and Devolved Taxes Administration (Scotland) Act received Royal Assent in 2024 and sets out the framework for Scottish Aggregates Tax. HMRC have worked with their counterparts in the Scottish government and Revenue Scotland to minimise additional burdens on taxpayers supplying aggregates across the border and to avoid double taxation.
Detailed proposal
Operative date
The changes will apply on and after 1 April 2026.
Current law
The current law for Aggregates Levy is set out in Part 2 of the Finance Act 2001, sections 16 to 49 and schedules 4 to 10. Relevant secondary legislation is in the Aggregates Levy (General) Regulations 2002 (SI 2002/761) as amended.
Section 18 of, and Schedule 1 to, the Scotland Act 2016 have made prospective changes to Part 2 of the Finance Act 2001.
Proposed revisions
From 1 April 2026, secondary legislation will bring into effect the changes made to Part 2 of the Finance Act 2001 by the Scotland Act 2016. References in the Finance Act 2001 to ‘United Kingdom’ will change to ‘England, Wales or Northern Ireland’ to disapply Aggregates Levy in Scotland. Amendments to section 30 of the Act will enable regulations to provide for a tax credit for aggregate moving to Scotland or Scottish waters from England, Wales or Northern Ireland.
Finance Bill 2025-26 will introduce legislation to make the following further amendments to the Finance Act 2001 from 1 April 2026:
- section 19 will be amended so that aggregate moving from a producer’s site in Scotland to England, Wales or Northern Ireland will become liable to Aggregates Levy
- section 17 will be amended so that aggregate which has been subject to various movements that mean Scottish Aggregates Tax will have been paid on it will not be subject to Aggregates Levy when further moved to England, Wales or Northern Ireland
- section 48 will be amended to define different parts of United Kingdom waters (adjacent to Scotland or adjacent to the rest of the United Kingdom) which will be referred to in the Act
- the Aggregates Levy (General) Regulations 2002 will be amended to provide for a tax credit on aggregate which is moved to Scotland or Scottish waters from England, Wales or Northern Ireland
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| nil | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Macroeconomic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
There is no impact on individuals as this measure only affects businesses.
Equalities impacts
This measure only affects businesses, therefore it is not anticipated that there will be disproportionate impacts on those in groups sharing protected characteristics.
Administrative impact on business including civil society organisations
This measure is expected to have a negligible impact on approximately 150 registered businesses who either extract aggregate in Scotland or supply aggregate to Scotland from England, Wales or Northern Ireland.
This includes an estimated 40 businesses or fewer who supply aggregate across the Scottish border and will need to account for both taxes (paying one while claiming a tax credit for the other).
One-off costs include familiarisation with the new rules and registering with Revenue Scotland to pay Scottish Aggregates Tax. The Scottish government has published an impact assessment of the business impacts associated with the introduction of Scottish Aggregates Tax.
Businesses that no longer have a liability to Aggregates Levy will need to notify HMRC to deregister. Businesses who supply aggregates across the border may have one-off costs from updating existing software to claim a tax credit from one tax while paying the other. Continuing costs for these businesses include completing additional returns.
Customer experience for businesses supplying aggregate across the border could be impacted through having to account for both Aggregates Levy and Scottish Aggregates Tax. To support these businesses HMRC and Revenue Scotland will provide clear and targeted guidance to explain the new obligations. The changes are not expected to impact civil society organisations.
Operational impact (£ million) (HMRC or other)
There are no anticipated operational impacts or associated costs for HMRC as a result of this measure.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The administrative changes made to Aggregates Levy as a result of devolution to Scotland will be monitored through information collected from registrations and tax returns, as well as through communication with the aggregates sector.
Further advice
If you have any questions about this change, contact Michael Lyttle by telephone on 03000 585637 or email michael.lyttle@hmrc.gov.uk.