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.

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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.

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December 5, 2018

Key points from our 2018 budget report

Today we publish our annual Budget report, “Scotland’s Budget 2018” which is available at the following link.

The aim of the report is to set out the opportunities, risks and choices facing the Scottish Government as it prepares it draft budget for 2019/20. The report covers the outlook for the Scottish economy and the Scottish budget.

Each year we also focus on a variety of longer term public finance questions. This year we focus on the options for reforming taxes and introducing new taxes, and discuss the differences in the funding of higher education between Scotland and England.Continue reading

November 8, 2018