Scotland raised £98.3 billion in government revenue in 2025-26, a 6.9% year-on-year increase, according to the latest Government Expenditure and Revenue Scotland (GERS) statistics published this week. That is the highest figure on record, and it matters well beyond the headlines. When the public finances strengthen, the policy environment for businesses tends to follow, more headroom for targeted support, less pressure on the services that SMEs and their employees depend on every day.
The £1.5 billion rise in income tax receipts is the figure worth sitting with. It reflects a workforce earning more, and more people in employment. The Scottish Fiscal Commission, which independently scrutinises Scotland's tax projections, has consistently noted that income tax divergence between Scotland and the rest of the UK is growing, Scottish higher-rate taxpayers now pay more than their counterparts south of the border, which creates real considerations for businesses recruiting senior staff or planning salary structures.
The Scottish Government attributed part of the growth to tax policy decisions made at Holyrood, where ministers have used devolved income tax powers to raise additional revenue from higher earners. According to the Scottish Government's own budget documentation, those choices are designed to fund public services while keeping lower earners better protected than in England. For businesses, the practical read is this: the talent you are hiring has a different take-home position depending on where they sit in the pay band.
Context matters here. Scotland's fiscal position, as measured by GERS, still shows a deficit when compared to the UK as a whole, a point that opponents of independence return to annually. But the direction of travel in 2025-26 is unambiguously positive. The Fraser of Allander Institute, one of Scotland's leading economic research bodies, has noted that Scottish revenue growth has outpaced UK-wide growth in several recent years, driven by a combination of strong labour market performance and deliberate tax policy. A record revenue base gives Holyrood more tools to work with, and that includes economic development spending that flows directly to businesses through bodies like Scottish Enterprise and Highlands and Islands Enterprise.
For Edinburgh and Scottish SMEs, the practical implication is a public sector with slightly more breathing room than it had twelve months ago. That means procurement pipelines are less likely to be frozen, grant programmes are more likely to be maintained, and the business support infrastructure, from Business Gateway to the Scottish EDGE fund, has a firmer foundation beneath it. None of that is guaranteed, and UK-wide spending pressures from Westminster remain a constraint on what Holyrood can do. But a record revenue year is not nothing. It is, in fact, exactly the kind of fiscal signal worth tracking.