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September 23, 2014
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Scottish Tax Raising Powers

In light of the recent “No” vote from Scotland it is worth looking at the devolved tax powers Scotland are due to receive under previous agreements.

The Scotland Act 2012

The Act gives Scotland the right to set a Scottish Rate of income tax to be administered by HMRC. This power is expected to be exercised from April 2016.

The Scottish Rate of income tax is calculated as follows:-

Take the UK rate bands (currently 10, 20, 40 & 45%)

Deduct 10% from each band

Add the Scottish rate (as set by the Scottish Parliament for that year)

For example, if the Scottish Rate was 8%, then those UK residents who are subject to the Scottish Rate would pay an effective 38% in the higher rate bracket rather than the current 40% rate payable in the rest of the UK.  Scottish basic rate taxpayers would pay 18% (rather than 20%) and so on.

National Insurance rates will remain unchanged, as will capital gains tax.

A Scottish Taxpayer is someone who is UK resident for tax purposes and has their main home in Scotland and spends more days in the year in Scotland than in any other part of the UK.

Stamp Duty Land Tax

The Scotland Act also provides that the rules on SDLT within the UK need not be applied by the Scottish Parliament to transactions in relation to Scottish Territory.  It is expected that this power will be implemented from 1 April 2015.

The Land and Buildings Transaction Tax (Scotland) Act 2013 has now received Royal Assent.

The rates of tax to be applied have not yet been announced, but are expected soon, now that the referendum is concluded.  However, we do know that it will be a progressive tax and that slices of the price will be charged at different rates, starting with nil tax for the lowest threshold and increasing for at least two thresholds above that.

Also the UK wide Landfill Site Tax will not apply to Scotland. From April 2015 Scotland will be subject to the Scottish Landfill Tax.

Contact us today to discuss your tax requirements.
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