Under the Scotland 2012 Act, the Scottish Parliament has new limited financial powers from April 2016. We were interested to see how this would impact the 2016-17 draft Scottish Budget which was unveiled by Scotland’s Finance Minister, John Swinney, to MSPs on Wednesday 16th December.
Scottish Rate of Income Tax (SRIT)
As mentioned in one of our earlier accountancy blogs, from April 2016 all individuals identified as “Scottish Taxpayers” will be liable for the Scottish Rate of Income Tax. On Wednesday Mr Swinney announced that this will be set at 10p in the pound, which, in short, means that Scottish Taxpayers will pay the same rate of tax as those south of the border. You will be affected by this if you, or anyone you employ, is a Scottish Taxpayer. For more information please contact one of our partners or refer to our earlier blog entitled ‘Tartan Tax is around the corner’:
Some other tax measures were proposed that will be of interest to many of our clients:
Land and Building Transaction Tax Levy
There will be a new additional 3% Land and Buildings Transaction Tax Levy on the purchase of many second homes from April 2016 in Scotland. The Land and Buildings Transaction Tax (LBTT) replaced the Stamp Duty Charge on property sales in Scotland earlier this year and, in the same way as income tax, uses a graduated tax rate depending on the purchase price of the property.
Mr Swinney said there would be no change to the thresholds for residential, non-residential and lease transactions. However buyers who are purchasing an additional residential property, such as a second home or a buy to let, worth more than £40,000 will be liable for a 3% supplement. This additional tax has been introduced to help first time buyers get on the property ladder. However, we anticipate that it will have an impact on many of our clients, especially those who continue to build up residential property portfolios.
Council tax bills are again to be frozen next year, with a review to be undertaken in the future.
If you wish to discuss any of the issues raised in the draft Scottish Budget with one of our partners at Greaves West and Ayre, please do not hesitate to get in touch.
Richard Ayre ACA
Corporate Services Manager