Opinion Former Article

Hammond's budget highlights differences for Scottish taxpayers

Commenting on today's UK Budget, Moira Kelly, chair of the Chartered Institute of Taxation's Scottish Technical Committee, said:

“The Chancellor’s decision to increase both the personal allowance and higher rate income tax threshold may be good news for taxpayers, but it could be bad news for Derek Mackay as he tries to manage the Scottish budget.

“Today’s announcements highlight the practical difficulties of having control over some – but not all – aspects of the income tax regime.

“Because the Scottish Government has no control over the level at which the personal allowance is set, it means that thousands of people who paid Scottish income tax this year will be taken out of the income tax system altogether, resulting in a loss of revenues that would otherwise have gone directly to Holyrood.

“With a median income of £24,000 per year in Scotland and only 2.5 million taxpayers, losing tax contributions from several thousand individuals can have a significant impact on the Scottish budget.

“The Scottish Government does, however, have control over rates and bands, including the power to set a higher rate threshold for Scottish taxpayers.

“However, it is unlikely that they will follow the UK Government’s lead in increasing the higher rate threshold to £50,000 from next April, highlighting a growing gulf between Scottish and English taxpayers.

“For those who are able to – such as self-employed business owners – this is likely to increase attractiveness of reorganising their tax arrangements to opt out of Scottish income tax and into UK-wide corporation tax in order to reduce their liabilities”.


Notes for editors:

1. The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 18,400 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
Contact:  Chris Young, Scotland External Relations Officer, 07900 241 584; cyoung@ciot.org.uk


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