Scotland’s Finance Secretary, John Swinney, has delivered his budget to the Scottish Parliament today in which he ruled out any increase in income tax rates for Scottish taxpayers, and announced a three per cent surcharge on the land and buildings transaction tax for the purchase of many second homes and buy-to let properties next year.
‘Anyone looking for surprises in the Scottish budget today would have come away very disappointed. As predicted, the Scottish Rate of Income Tax was confirmed as 10p in the pound – effectively meaning no change in the rate of tax to be paid by Scottish residents. Mr Swinney really had no alternative here as he made a point of explaining that under the current structure, to do otherwise would either impact adversely on the poor or give unwelcome reductions to high earners.
‘It was disappointing that he chose to follow George Osborne’s move in bringing in a three per cent tax supplement for purchases of second homes of more than £40,000, but again I think his hand was forced here. Anticipating a flow of investment monies from the South, this move clearly favours first time buyers in Scotland by keeping the lower priced properties within their reach. However it’ll be interesting to see how much tax he will raise by this measure, and I suspect in reality it will be far less than the £17m - £29 m predicted.
‘Mr Swinney also made numerous references to the fiscal framework, and he must be frustrated that he is unable to make any clear decisions until the block grant, Barnett formula and borrowing powers have been agreed. These need to be in place before March 2016 when he will make further budget announcements, and I think that this will be the time we’ll begin to see some real changes, particularly as it will be closer to the Scottish Parliament elections.’