First Minister for Scotland plans to block UK tax 'cuts' in favour of public services
First Minister Nicola Sturgeon has announced plans that income tax rates in Scotland will be frozen, with no increases in the basic, higher or additional rates. However the significant cuts (reduction in income tax liabilities) which would result from the increases to the higher rate threshold proposed by the UK government would not be adopted in Scotland under the proposals. Their plans are that the higher rate threshold will be frozen in real terms and increased only in line with CPI inflation in 2017/18 and by no more than inflation until 2021/22.
The exact level of the higher rate threshold will be set out each year by the Scottish Government at the budget.
The Scottish Government's believe their proposals are a more balanced approach which 'will be fair to higher rate taxpayers while also generating additional revenue to be invested in Scotland's public services such as the NHS'.
Under the proposals, the Scottish Government will ensure a Personal Allowance of £12,750 in 2021/22. If necessary, the Scottish Government will create a zero rate band to ensure that this protection for low income households is delivered.
Alongside the tax proposals, the First Minister published Scottish Government analysis that demonstrated any increase in the additional rate for top earners; whilst the UK rate remains at 45p; could put millions of pounds of revenue at risk. Accordingly, she confirmed that the additional rate will not increase in 2017/18, but that the analysis will be updated each year to inform decisions in future budgets.
Nicola Sturgeon said:
'In setting out our proposals we have balanced the need to invest in and support our public services with a recognition that many households are still facing difficult economic challenges, and with the need to grow the Scottish economy.
We will not allow our public services to pay the price of an inflation busting tax decrease for the highest earning 10% of the population. We think that is the wrong choice and today we set out our alternative.
We will freeze the basic rate of tax for the duration of the next parliament. We do not believe it is right that those on low incomes are asked to pay for austerity. That does not tackle austerity, it simply shifts the burden to those who can least afford it.
No taxpayer will see their bill increase as a result of these Scottish Government proposals.
In 2017/18, instead of offering a large tax cut we will ensure the higher rate threshold rises only by inflation.
That means next year the threshold for higher rate taxpayers will go from £43,000 to £43,387'.
These proposals would introduce a difference between the amount of income tax payable by higher and additional rate taxpayers in Scotland to that paid by taxpayers with similar income in the rest of the UK.
Other parties have their own plans for the income tax rules for Scotland.
Internet link: Scotland Gov.News
Our other services...
We can help with the preparation of accounts for all types of business. Whether you are a Sole Trader, Partnership, Limited Company, Limited Liability Partnership or a Charity, AGP has the expertise to deal with you. We help you fulfil all your obligations with HMRC, Companies House and any other regulatory body that you are required to report to.
An audit provides a high level of independent assurance of the financial position and results of an organisation. This gives shareholders confidence that the reported performance of the business is accurate as well as providing external users with certainty that the accounts show a true and fair view. An audit lends credence to the company accounts in a number of ways.
It is important to ensure your tax planning reflects any changes to your circumstances which is why we work very closely with all our personal clients. AGP are trusted to manage tax efficiently. Sometimes just a simple review of your personal tax circumstances can reveal significant tax saving opportunities which can be realised quickly and at minimal cost..
AGP can become your own part-time Payroll Manager. An expert who knows the complexity of the relevant legislation inside out and for a fraction of the cost of an internal manager. Why not outsource this obligation and spend the time saved doing what you do best, running your business?
Corporation tax can be a huge outgoing for your company if it is not managed correctly and planned appropriately. You can trust AGP to employ a holistic approach to your tax planning whether you are a medium sized SME, an international organisation or a small owner-operator.
Management accounts allow business owners to exert a far greater degree of control over their business, recognising and addressing problems and identifying opportunities soon after they arise.
When running a business, priorities are often focused on the operational side of your business. Bookkeeping & administration can often be put off until it becomes quite a major task. By taking advantage of our bookkeeping service, we can take this problem away so you can get on with running your business while we manage your accounting books.
We take away the hassle. Whether starting a new business or restructuring an existing one, our extensive knowledge of company formation means we can advise you on the merits and possible pitfalls of incorporation.
We have a wealth of experience in the contractor market and as a result there are not many firms of Chartered Accountants that can claim they know the contractor industry as well as AGP. This leads to a number of benefits.