Shirley McIntosh, RSM’s Head of Tax in Scotland said: ‘As widely expected, the Scottish Budget provided little change to the tax position for Scottish taxpayers for the next tax year.
‘In her Budget statement, Finance Secretary Kate Forbes, announced inflationary increases to the lowest four income tax rate bands and a freezing of the top rate band at £150,000. How this will affect the current disparity in rate bands between Scotland and England and Northern Ireland will only be known when the Chancellor, Rishi Sunak, presents his budget in Westminster on 3 March.
‘Despite calls for the temporary increase in the nil rate band for Land & Buildings Transaction Tax (LBTT) on residential property to be extended, Ms Forbes confirmed that rates will return to pre-July 2020 rates from 1 April 2021. LBTT will otherwise remain unchanged from current rates and bands. However, she did note a consultation would take place on the possible reform of the Additional Dwelling Supplement, which has proven controversial due to the relatively short period allowed for a refund when replacing a main residence.
‘Consultation on tax policy has been an important commitment of the Scottish Government and the results of the most recent consultation have now been published. It was not surprising that there were almost as many suggestions for new or amended policy as there were respondents highlighting the complexity of any tax reform; but it was clear from today’s budget statement that, as expected, stability remains the current focus. However, with an election coming soon and polls showing increasing support for independence, this consultation provides food for thought.
‘Businesses in the hard-hit hospitality and retail sectors will welcome a further three-month extension of the business rates relief, paid for with the relief reimbursed by the supermarkets, and a reduction in the poundage charged. There was also the promise to match any further extension to the relief announced by Westminster.
‘The spotlight now turns to the forthcoming Westminster budget on 3 March. Should there be any major tax changes announced in Mr Sunak’s budget, the Scottish Government will still have time to consider how this affects the Scottish budget and propose changes; albeit within a short timeframe of a month to approve any new measures before the end of the tax year.’