Draft Scottish Rates of Income Tax (Consequential Amendments) Order 2018

Stephen Kerr Excerpts

Monday 26th March 2018 General Committees

[Mel Stride]

I would say that it is entirely in line with the vows we made at that time, and indeed the Scottish Government have exercised their right under the Scotland Act 2016 to vary Scottish tax rates—both the thresholds and the marginal rates. The Scottish Government used those powers at their recent budget to make a number of changes, including the introduction of a new starter rate of 19%.

[Stephen Kerr (Stirling) (Con)]

I am grateful to the Government for stepping in to sort out the mess that the Scottish National party Government have created in Scotland. Are not the facts that the SNP did not consult anyone in the Treasury at Westminster about the changes it was about to make and the impact they would have on marriage allowance and on pensions?

[Mel Stride]

I thank my hon. Friend for that intervention. In the spirit of moving forward positively, I shall leave it for his remarks to be placed on the record as he has seen fit.

As I was saying, the changes included the introduction of a new starter rate of 19%, an intermediate rate of 21%, and increases in the higher rate to 41% and in the top rate to 46%. The Scotland Act passed the powers to make consequential amendments to primary legislation via a statutory instrument, where required to respond to changes made by the Scottish Government.

The order makes changes to reflect the new income tax rates so that certain tax reliefs continue to work as intended when the changes take effect in April. It will ensure that those in the new Scottish starter and intermediate rate bands continue to receive marriage allowance at the current rate of 20%. It will also ensure that Scottish taxpayers continue to get the right amount of relief on charitable donations and claim the right amount of pensions tax relief under the relief at source mechanism, and that those who have deferred their state pension continue to pay tax at their marginal rate on a lump sum.

The order also makes minor changes to the Income Tax Act 2007, the Taxes Management Act 1970, the Income Tax (Trading and Other Income) Act 2005, the Finance (No. 2) Act 2005, the Finance Act 2016 and the Scottish Rate of Income Tax (Consequential Amendments) Order 2015, to reflect the new taxes.

The changes will ensure that the tax system remains fair and consistent and that there are no complex tax relief rules depending on where in the United Kingdom a taxpayer is resident. They will ensure that those reliefs and wider tax legislation continue to work as intended and demonstrate our continuing commitment to making the Scotland Act and devolution work. I commend the order to the Committee.