Budget 2019-20: what next?

This spring the Scottish Budget for 2019-20 secured safe passage through Parliament.

Once again, the debate – at least outside parliament – focussed upon the familiar issues of income tax rates and local government budgets.

But important longer-term trends are starting to emerge which will shape the Scottish budget in new ways. With the next election just over two years away, these issues are likely to increase in importance as the campaign approaches.

In this blog, we set out five key issues to watch out for.Continue reading

April 23, 2019

Spring Statement 2019: route-map to an unlikely destination?

Shorn of major policy announcements, the Spring Statement is an opportunity for the Office for Budget Responsibility (OBR) to update its economic and fiscal forecasts, and for the Chancellor to announce policy reviews on everything from minimum wages to biodiversity.

So how have the forecasts changed since October 2018?Continue reading

March 13, 2019

Scottish Budget Analysis Event

This morning we held an event giving an overview of the Scottish Budget unveiled earlier this week.

The slides from this event are available for download here, and are provided below.

December 14, 2018

Scottish income tax policy 2019/20

This afternoon, Mr Mackay set out the proposed income tax parameters for 2019/20 in the draft Budget.

These are shown in the table at the bottom of this blog, together with last year’s policy and the 2019/20 UK policy.

Mr MacKay said that 99% of Scottish income taxpayers will pay less tax in 2019/20 than they did in 2018/19.

This statement is correct in the sense that, in 2019/20, 99% of taxpayers will benefit from a higher tax-free personal allowance**, (and to a lesser extent the Scottish Government’s increase in the thresholds for the basic and intermediate rates).

What about comparisons with the rest of the UK? Mr Mackay pointed out that 55% of Scottish taxpayers will pay less income tax than rUK taxpayers with equivalent income.

This is true in that the 19% Starter Rate in Scotland means that those with income less than £27,000 (slightly above the Scottish median income) will pay less tax than rUK counterparts.

It is worth bearing in mind however that the difference between Scottish and rUK tax liabilities at this end of the income distribution is small – the maximum benefit to Scottish income taxpayers is just over £20 per year.

Some examples of the difference in liabilities for different salaries are given in the diagram below.

Continue reading

December 12, 2018

What’s next for taxpayers in Scotland?

We’ll soon find out what the Scottish Government has in store for income tax in Scotland in 2019/20 when the Scottish Budget is published next week.

Taxpayers in the rest of the UK already know what to expect after Chancellor Philip Hammond announced changes to income tax in the UK Budget at the end of October.

These were to:

  1. increase the personal allowance from £11,850 in 2018/19 to £12,500 in 2019/20
  2. to increase the Higher Rate Threshold in the rest of the UK from £46,350 to £50,000.

As it is entirely possible that readers might not have made it through our 160 page Budget report on the 8th November, this blog will set out some tax options available to Mr Mackay for the forthcoming year.

Before we do so, here is a summary of the differences between Scottish and rUK taxpayers in the current financial year.

Continue reading

December 5, 2018