What Impact Will the Changes to Personal Taxation Have?
From a practical perspective, the change that will impact most people is the raising of the income tax personal allowance to £11,850 and the higher rate threshold to £46,350. While both these changes will apply to certain taxpayers in Scotland (such as those who primarily take income via dividends), for the majority, whether they apply north of the border will depend on the will of the Scottish Government. For political reasons it would seem likely that the increase in the personal allowance will be followed at Holyrood but, given that the Scottish Government is actively considering ways to increase taxation, it would seem unlikely that the increase to the higher rate threshold will be adopted.
Similar considerations apply to the headline grabbing exemption from Stamp Duty Land Tax for first time buyers. Once more this will not automatically apply in Scotland and given the different political mood at Holyrood there can be no guarantee that a similar exemption will be applied here (although there will be pressure to do so).
While relatively little may have changed with personal taxation, given some of the pre-Budget predictions the lack of change may not be a bad thing, with the rules on entrepreneurs’ relief and full tax relief on pension contributions (which had both been subject to rumours) surviving intact. There was also the usual tinkering at the edges (abolition of certificates of tax deposit and changes to the rules on married couple’s allowances) and the announcement of various forthcoming reviews on matters such as the way income tax applies to trusts, the operation of the penalties regime and further crackdowns on ‘off payroll working’.
Finally, it was announced that the time period for HMRC investigating off-shore issues will triple to 12 years – plenty of time for them to fully absorb the recent revelations of the Paradise Papers.
Link to article
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