Repeal the powers on income tax given to the Scottish Parliament as part of the Scotland Act 2012, so that Scottish rates of income tax can be aligned back to those set by the UK Government.
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The Scottish Government is creating a widening gap between tax thresholds in Scotland compared to the rest of the UK. We believe this has created a more complex and unfair tax system, and create an increasing divide between the UK nations.
Monday 9th September 2024
The UK Government remains committed to devolution and the government has no plans to alter the devolution settlement to remove income tax powers.
A referendum on Scottish devolution was held on 11 September 1997, with 74% voting in favour of a Scottish Parliament and 63% voting for the Parliament to have powers to vary the basic rate of income tax. Since the passage of the Scotland Act 1998 which established the Scottish devolved institutions and devolution settlement, further powers have been devolved to both the Scottish Parliament and Scottish Government through the 2012 and 2016 Scotland Acts.
Following the decision made by the people of Scotland the 2014 referendum to remain part of the United Kingdom, then Prime Minister David Cameron made clear that commitments made by the three main pro-Union parties to devolve further powers to the Scottish Parliament would be taken forward by a new cross-party commission chaired by Lord Smith of Kelvin. On 27 November 2014, the Smith Commission published its final report detailing the Heads of Agreement on further devolution of powers to the Scottish Parliament.
The Scotland Act 2016 delivers on the recommendations made by the Smith Commission, and in particular devolved further income tax powers including the power to set rates and bands on earned income; this built upon commitments made in the Scotland Act 2012, which included devolving the ability of the Scottish Parliament to set a Scottish Rate of Income Tax.
The UK Government remains fully committed to devolution and to implementing the Smith Commission’s recommendations. The UK Government continues to work collaboratively with the Scottish Government to implement the Scotland Act 2016, which includes passing secondary legislation to deliver the extensive welfare granted by the Act.
Since 6 April 2017, the Scottish Parliament has had the power to set the income tax rates and bands applicable to Scottish taxpayers on their non-savings and non-dividend income. The rates and bands are set each year in the Scottish Rate Resolution. The Scottish block grant is adjusted to reflect the change in funding stream in the manner set out in the 2016 Fiscal Framework agreement between the UK Government and the Scottish Government, which was further updated in July 2023 following agreement between both governments. The Scottish Government is able to exercise its fiscal powers fully and flexibly while operating within a sustainable fiscal framework for the whole of the UK.
Since February 2019, the Scottish Parliament, through the new powers devolved via the Scotland Act 2016, has been able to set rates and bands of income tax, create new benefits in devolved areas, and to legislate in a variety of new areas. The Scottish Parliament remains one of the most powerful devolved parliaments in the world, and the UK Government believes that the current devolution settlement strikes the right balance between empowering the Scottish Government to pursue its own fiscal objectives whilst remaining accountable to the Scottish public for decisions made.
Scotland Office