 Where does Scotland get its money from? Most Scottish taxes are collected by Her Majesty's Revenue and Customs or HMRC. Scotland receives the majority of its funding in the form of a block grant from Her Majesty's Treasury. The block grant is roughly £30 billion each year. How is the block grant calculated? Since 1978, most changes to the block grant have been determined using a formula called the Barnett formula. Each year changes to the grant get added onto the previous year's grant, thus creating a new baseline for the next 12 months. The Barnett formula provides Scotland with a share of the changes in some of the UK government's public expenditure. To understand what the Barnett formula applies to, you need to be aware of how government spending is broken down. The amount the government spends is called total managed expenditure. This is split into two. One amount goes to government departments and is known as departmental expenditure limits or DELL. DELL is set over a period of years. Departments include education, health, transport, local government and business innovation and skills. The other amount is referred to as annually managed expenditure or AME. This is demand led expenditure such as welfare payments and pension schemes. AME is set annually. The Barnett formula calculates how much funding is available each year in Scotland's DELL. The Scottish government then decides how to distribute this money to its different departments. The formula includes three elements. Firstly, the annual change in each UK government department. Secondly, a comparison between UK government services and those partly or fully devolved to the Scottish government. For example, education is fully devolved in Scotland, so the comparability factor is 100%. Thirdly, Scotland's population as a proportion of England, England and Wales or Great Britain depending on the coverage of each department. For example, the Home Office covers England and Wales, so Scotland's population is calculated as a percentage of the population of England and Wales. The Scottish Parliament is about to get new tax powers. Revenue from these taxes will fund the Scottish budget and the block grant will decrease as a result. For more information on the Scottish budget, please go to scottish.parliament.uk forward slash scottish-government-budget