Sovereign borrowing, tax changes
0 CommentsLaw firm Shepherd and Wedderburn says that the No vote in the referendum means there is less pressure on assessing the legal processes required to redomicile businesses to England from Scotland, but there are several issues regarding government borrowing and taxation rates due to the devolution of powers from Westminster to Holyrood:
One particular financial devolved power to be aware of is a recent amendment to the Scotland Act 2012 by which the Treasury has given increased borrowing powers to the Scottish government to borrow up to £2.2 billion, for capital expenditure purposes. The provision is not yet in force but if it does come onto the statute book, one means by which this could be achieved is by the issue of bonds in the capital markets. This raises the intriguing prospect of so-called Scottish ‘Braveheart’ bonds being issued in the future, even though Scotland remains part of the UK, with an implicit UK guarantee.
It expects rates to be announced soon for the Land and Buildings Transaction Tax, which replaces stamp duty land tax in Scotland, and the Scottish Landfill Tax before both come into force next April.
The new Scottish rate of income tax will follow in April 2016, allowing the Scottish government to vary the rate of income tax on employment income and self-employed profits by up to 10% for Scottish taxpayers – although in practice any differential in rates is likely to be much lower. This will affect all employers with staff who are treated as Scottish taxpayers, as changes will be required to PAYE procedures. Employers with tax equalisation policies will also need to seek advice.
Devolution is expected to bring further changes to taxes:
It is likely that there will be further devolution of taxes to the Scottish government, with all the main political parties promising new Scottish tax powers. It is to be hoped that all parties will continue to work towards a more effective and simpler tax system.