UK marks transfer of ‘landmark’ income tax powers to Scotland

The Scottish government will have unprecedented power to shape the country’s economy, the UK government declared as the Scottish Parliament’s new power to set income tax rates and thresholds came into force.

The regulations — released on November 30, St. Andrew’s Day — bring into force a Scotland Act 2016 measure giving the Scottish Parliament the power to set different rates for Scottish taxpayers. The new power may be exercised for the tax year 2017-18 onward for income other than savings and dividends. Power to set the level of the personal allowance is not being devolved …

“These powers are being transferred while maintaining for people in Scotland the benefits of being part of a strong United Kingdom,” said David Mundell, the UK’s secretary of state for Scotland, even as tensions over the results of the June 23 EU referendum continued to dominate the political agenda. A majority of Scots (62 percent) voted to remain in the EU and Scottish first minister Nicola Sturgeon has indicated that a second referendum on Scottish independence from the UK remains an option if the UK takes a hard line in the Brexit talks.

Read more: My news story for Tax Analysts, 30 November (paywall).