With the ongoing and vigorous debate over Brexit at Westminster, it would be all too easy to forget the Scottish Budget which was presented last week.
When Finance Secretary Derek Mackay delivered his Budget Statement to the Scottish Parliament on 12 December setting out his plans for tax and spending for the year ahead at Holyrood it wasn’t good news for higher rate taxpayers. Higher rate taxpayers will see larger tax bills in Scotland from April 2019 as the Budget confirmed plans to freeze the top rate threshold for another year at £43,430 compared to the higher threshold of £50,000 for in the rest of the UK.
Highlights announced in the Scottish Budget include:
- freezing the income tax higher rate threshold (41%) at £43,430 and the additional higher rate threshold (46%) at £150,000
- increasing the income tax starter tax band (19%) threshold from £13,850 to £14,549
- increasing the income tax basic rate band (20%) threshold from £24,000 to £24,944
- increasing the Additional Dwelling Supplement for Land and Buildings Transaction Tax (LBTT) from 3% to 4% for ‘second home’ purchasers with effect from 25 January 2019 (if the contract for the transaction was entered into on or after 12 December 2018)
- reducing the lower rate of non-residential LBTT from 3% to 1%, increasing the upper rate from 4.5% to 5% and reducing the starting threshold of the upper rate so it applies from above £250,000
- introducing a below-inflation increase in the non-domestic rates poundage
- maintaining the Small Business Bonus Scheme and transitional support for businesses in hospitality and for office premises in Aberdeen and Aberdeenshire; and
- increasing the standard rate of Scottish Landfill Tax (SLfT) to £91.35 per tonne and the lower rate of SLfT to £2.90 per tonne in 2019-20.
Finally, it is worth noting that the minority Scottish government will need political support, therefore none of these measures can be guaranteed. The SNP also reserved their position to revisit the terms of what they outlined in the event of a ‘no deal Brexit’.