Scotland to introduce new tax to encourage recycled materials in construction

The Scottish government has published plans for a new tax to encourage the use of recycled materials in construction.

The Aggregates Tax and Devolved Administration (Scotland) Bill, which was introduced in the Scottish Parliament yesterday (14 November), is intended to replace the existing UK Aggregates Levy which currently covers Scotland. 

This levy was introduced in 2002 to ensure that the environmental impacts of aggregates extraction were more fully reflected in prices. 

The Scotland Act 2016 empowered the Scottish Parliament to legislate for a devolved tax to replace the UK Levy. The new bill implements this power, with the same environmental aims.

The levy will discourage unnecessary exploitation of primary aggregates, maximise the use of secondary aggregates and incentivise development of alternative materials. The rate of the tax will be set as part of the annual Scottish Budget process. 

If approved by MSPs, the Scottish government intends to introduce the new tax from 1 April 2026 

If the bill is approved, secondary legislation and preparatory work by Revenue Scotland will also be required before any changes can be formally introduced. The UK government will also have to introduce legislation to turn off the application of the Aggregates Levy in Scotland. 

Scotland’s public finance minister Tom Arthur said: “The new tax proposals have been developed to support the Scottish government’s ambitions for a fair, green and growing economy, encouraging the use of recycled materials in aggregates across a range of construction-related activities. The tax would be administered by Revenue Scotland, allowing for a modern, effective and Scotland-specific approach.

“In line with our New Deal for Business, this legislation has been informed by extensive engagement with the aggregates industry and others, and I am grateful to our advisory group for their input so far. I look forward to this group’s work continuing as the Bill progresses through Parliament.”