Scotland’s Finance Secretary delivers his draft Budget on Thursday 14 December. We predict what might be announced, based on Nicola Sturgeon’s proposals – will you be affected if we’re right?
This will be one of the most keenly watched Budgets in a long time. The UK Chancellor made some headline-grabbing changes to his Budget last month, and the pressure is on for Scottish Ministers to do the same.
So if you live in Scotland, read carefully, as things are likely to change. Let’s take a look at two of the changes that might directly affect Scottish pockets.
We are likely to see changes to the Scottish Rate of Income Tax (SRIT) in Scotland’s Budget. Nicola Sturgeon has cleared the way with a set of four proposals for tax changes, indicating there will be no cuts, no blanket rises and middle and higher earners will shoulder more of the tax burden.
Currently Scottish rates of income tax are:
- Scottish basic rate – 20%, levied on income between £11,501 and £43,000
- Scottish higher rate – 40%, levied on income between £43,000 and £150,000
- Scottish additional rate – 45%, levied on income over £150,000.
Until last year, rates were the same across the UK, but when Hammond raised the threshold for higher rate taxpayers from £43k to £45k, Scotland’s level remained unchanged. For the first time, there were different tax regimes in different UK nations. Now the precedent has been set, there is appetite for further change.
Sturgeon’s proposals are wide ranging. None of the proposals show any rise for those earning less than £24,000, and all proposals show increases in the higher tax rates (from 40 to 41 or 42%). It’s those at the top who earn over £150k who may have to pay up to 50% in some of the more ambitious proposals.
Last month, the Chancellor removed stamp duty for first time buyers for properties under £300,000, so there is pressure on Scotland to follow suit.
However, the Scottish housing market is different. For a start, property prices are lower, and buyers of properties up to £145k don’t pay tax anyway – so an exact replica of Hammond’s policy might not suit Scotland. Besides, as we reported, it’s mainly low earners and Londoners who will benefit from the stamp duty shift.
But it certainly makes a headline. Sturgeon is looking at an ‘alternative’ option, but it probably won’t be the same policy. We will wait with interest…
Scotland’s Finance Secretary has delivered his draft Budget and announced a number of proposals for Scotland.
On income tax, the Finance Secretary announced a change that will see lower earners paying less tax. Mr Mackay announced a starter rate tax band of 19p for those earning between £11,850 and £13,850 and an intermediate band of 21p for those earning over £24,000 per year. Higher rate tax (those earning between £44,274 and £150,000) will is be increased to 41p, and top rate tax (earning over £150,000) to 46p.
In his Budget, the Finance Secretary also announced an extension of stamp duty exemption on homes worth up to £175,000 for first time buyers.
What do people in Scotland think?
Remember that this is only a draft budget, which has to be agreed by a Parliament where the SNP has a minority.
And importantly, how will the Scottish public react? According to our Consumer Insight Tracker, a September 2017 poll of Scottish people showed 56% worried about future tax levels, but more (64%) worried about public spending cuts. Of course, there’s a balance to be struck.
If you live in Scotland, how do you think these changes might affect you if they go ahead? Do you think there are other priorities that aren’t being addressed in Scotland’s Budget? Does any of this matter to you if you don’t live in Scotland?