Partner Article

2014 rings in the changes for Scotland

This year is going to be an important year for Scotland, with the referendum on whether it should be an independent country in September.

Notwithstanding this, with effect from 1 April 2015, Scottish Ministers will have powers to administer new ‘devolved’ taxes to replace the UK Stamp Duty Land Tax (SDLT) and Landfill Taxes.

Until then, the UK Government remains responsible for these and can introduce changes prior to the introduction of replacement Scottish taxes. Although transitional rules will be in place, it will be important that, during the period when SDLT is withdrawn and the new Land and Buildings Transaction Tax is introduced, anyone considering buying, selling or leasing property in Scotland, needs to be aware which tax is due, and when.

A new tax collection body, ‘Revenue Scotland’ will be established to collect and administer the devolved taxes. It will also have authority over penalties, anti-avoidance rules, resolving disputes and mediation, and appeals relating to the devolved taxes can be submitted to the new Scottish Tribunals service.

Under current constitutional arrangement, April 2016 will see the introduction of the Scottish Rate of Income Tax (SRIT). SRIT will remain part of the existing UK income tax model (i.e. it’s not a ‘devolved’ tax) but Scottish Ministers will be able to vary the rate.

All Scottish taxpayers will have their rate of UK income tax reduced by 10p in the pound across each income tax band, and the Scottish Parliament will be able to pass a Resolution setting a Scottish rate to replace the 10p reduction. The tax will be administered by HMRC, who will also set up the necessary systems, identifying Scottish taxpayers, collecting sums due, ensuring compliance, following up unpaid tax, and reporting on performance.

Revenues from SRIT will be collected by HMRC along with UK income tax receipts, but will be identified and reported separately and will form an element of the Scottish Government’s budget after 2016.

If Scotland says ‘Yes’ in September, then detailed policies on tax and spending would be set out in party manifestos for the 2016 election and thereafter, in the first budget in an independent Scotland.

The current Scottish Government proposes a transitional period during which the existing functions of HMRC are continued in Scotland and the rest of the UK on a shared-services basis, meaning taxpayers won’t see any immediate change to their current arrangements for paying tax.

This was posted in Bdaily's Members' News section by Baker Tilly .