Last month, the Scottish government used the devolved power over income tax for the first time. An historic occasion to be sure, but one that has further diverged the UK’s tax system.
The initial cause of divergence was the replacement of Stamp Duty and Land Tax (SDLT) with a Scottish specific land tax, Land and Buildings Transaction Tax.
The changes outlined involve a new income tax ‘starter rate’ of 19%, and a new intermediate rate of 21%. The year 2018/19 will also see an increase of 1% in the higher and additional income tax rate bands. As a result, we will see for the first time major differences between the Scottish tax system and the one applicable to the rest of the UK.
What about other countries in the Union? Well, Wales is bringing in a new Land Transaction Tax to replace SDLT in April this year and there are also plans afoot to grant the Welsh executive powers over the setting of income tax.
Currently, Northern Ireland does not have a power sharing executive but when it is restored, it’s possible that they may also be granted tax raising powers.
We could be about to see a full divergence within the UK of the tax system. But what does this mean for you? Just make sure that you keep your local accountant well aware of your activities and they will keep you compliant.
Contact your local AIMS Accountant.