Tag: devolution

Scottish higher rate threshold frozen amid ‘tax gap’ concerns

The Scottish government’s tax policies will continue to focus on fairness and investment in public services, Derek Mackay, cabinet secretary for finance, economy and fair work, said as he delivered his budget.

But Mackay ignored the pleas of business groups who had expressed concerns over a “growing tax gap” between Scotland and the rest of the United Kingdom, according to Murdo Fraser, Conservative member of the Scottish Parliament and shadow finance secretary. My news story for Tax Notes (paywall), December 13:

Scottish Higher Rate Threshold Frozen Amid ‘Tax Gap’ Concerns

Scottish tax plans create additional complexity and anomalies, experts warn

Planned changes to Scottish rates of income tax would add further complexity to a system that is already difficult for taxpayers to understand, tax professionals said after Derek Mackay, cabinet secretary for finance and the constitution, set out Scotland’s draft budget on December 14.

“Complexity is the price Scots will pay for exercising devolved powers over income tax. Today’s announcement underlines the increasingly diverging nature of income tax between Scotland and the rest of the UK,” said Moira Kelly, chair of the Chartered Institute of Taxation’s Scottish Technical Committee. The proposals have the potential to “increase both the costs and complexity of administering Scottish income tax as well as throwing into the mix some interesting anomalies,” she said.

The changes would establish Scotland as “a country with a very distinct tax system from the rest of the UK,” said Lindsay Hayward, head of tax for PwC in Scotland.

My news story for Tax Analysts, December 15 (paywall)