Opinion Former Article

CIOT comment on draft Scottish Budget

Today’s Scottish Budget means that higher earners will continue to pay more in tax than their counterparts elsewhere in the UK, while lower earners continue to be slightly better off north of the border.

The Chartered Institute of Taxation noted that the point where a taxpayer will pay more income tax in Scotland than they would in the rest of the UK rises as a result of today’s Scottish Budget from £26,993 to £27,243 because of increases to the thresholds announced by the Scottish Government that take inflation into account.

Scottish taxpayers earning less than £27,243 will pay less in income tax thank taxpayers elsewhere in the UK because of the lower Scottish starter rate of income tax, introduced in 20181.

The Institute also noted that forthcoming increases to National Insurance thresholds planned by the Westminster Government would have an impact on all income tax payers in Scotland as well as elsewhere in the UK2.

Alexander Garden, chair of the Chartered Institute of Taxation’s Scottish Technical Committee, said:

“While Scotland remains on a broadly similar tax path to last year, the immediate challenge facing the Scottish Government will be ensuring that a majority can be found in the Scottish Parliament to ensure that Scottish Income Tax can be collected in the new tax year.

“However the full picture remains unclear because we need to wait until the UK Budget on 11 March for confirmation of the impact of UK changes on Scottish taxpayers and the potential for further divergence3.

“This includes the planned UK-wide increase to the level that people start paying National Insurance to £9,500 and – although it seems unlikely – the potential for further increases to the tax-free personal allowance.

“Scots who earn income from sources such as savings and dividends are not impacted by today’s announcements as these are reserved to Westminster. They will have to wait until the UK Budget to know what income tax they will pay in the coming year.”


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