Posted: December 18th, 2015
By TOM BROWN
AMP members in Scotland have been worried by letters from Her Majesty’s Revenue and Customs (HMRC) about “the Scottish Rate of Income Tax”.
The advice is: You don’t need to do anything about the letters, unless you’ve recently changed your address. And you won’t be paying any extra income tax in 2016-17.
However, a financial expert suggests that in a few years, those in the supertax bracket may want to cross the border as tax exiles and use Newcastle or Carlisle as the UK version of Monaco!
The HMRC letter told Scots that from April “some of your income tax will be paid to the Scottish Government” and asking for confirmation of address “so that you pay the right amount of tax”.
The concern was caused by a warning that the Scottish Government’s draft budget “will include its proposals for the Scottish Rate of Income Tax which may affect the amount of tax you pay”.
However, when Finance Secretary John Swinney presented the first Scottish budget with new powers to raise or lower the levy by 10p in the pound, he resisted the temptation to set a different income tax rate north of the border for the next financial year.
With a Scottish Parliament election looming next May, Mr Swinney was playing safe. But his hope for “more flexibility” on tax rates from 2017/18 was taken as a prediction that Scottish taxpayers would be paying more than the rest of the UK.
If that happens, wage and pension departments of companies based in London would have to change their systems to take higher tax from employees and pensioners living in Scotland.
Confused? A lot of people are, so we sought advice from top financial adviser Raymond Pirrie, whose Glasgow-based Rosemount Asset Management manages £50 million of assets. Raymond has told his clients: “From April 2016, the Scottish Parliament has devolved powers to enable it to set the Scottish Rate of Income Tax (SRIT). There has already been speculation that this may mean a higher rate of income tax in Scotland than in other parts of the UK.
“HMRC, in their own inimitable style, have come up with a cunning plan and have issued a statement indicating that a Scottish tax payer will be defined using a simple test:
“‘For the vast majority of individuals, the question of whether or not they are a Scottish taxpayer will be a simple one – they will either live in Scotland and thus be a Scottish taxpayer or live elsewhere in the UK and not be a Scottish taxpayer.’
“Given the possibility that income tax rates in Scotland could be higher than the rest of the UK, then some taxpayers living and working in Scotland may want to consider where they live. This could mean that Carlisle and Newcastle, with their excellent transport links to Scotland, could become the UK’s very own version of Monaco, as taxpayers seek to establish residence in England to avoid SRIT.”
By FRANK THORNE
RECOLLECTIONS of what might have been overflowed when a band of retired Fleet Street names reunited at the historic Boot …
Merry Christmas and a
happy and healthy 2020
to all our members
and their …
This year’s Scots’ annual meeting was followed by a celebration lunch for Tom Brown (see below).
Tom is stepping back from day-to-day involvement …