Business and financial
More tax complexity despite No vote
Tricia Halliday from Martin Aitken & Co Chartered Accountants, looks at the tax implications for a ‘devo-max’ Scotland
I
n the end it was not the close-run affair previously predicted by the endless procession of pre-refer- endum polls. For the No camp, a huge sigh of relief, while the minority Yes
campaign suffered bitter disappointment. Even before the vote, Scotland was
promised enhanced control over taxation powers. Inevitably, this will lead to greater complexity and will place an increased burden on all employers including dental practitioners. This also looks likely to create confusion among Scottish tax payers. The Scotland Act 20ı2 gives Holyrood
the power to vary the rate of Income Tax (as legislated by Westminster) on non- savings income for Scottish taxpayers. This is done in two steps; first the rate is reduced by ı0 per cent, then increased by a rate set by Holyrood. If the rate was ı0 per cent, then there would be no change. However, if the rate set by Scottish Government was more or less, there would be a variation. For example the current UK basic,
higher and additional rates of income tax are respectively: 20 per cent, 40 per cent and 45 per cent. If the Scottish Government set the single rate at ıı per cent – Scottish taxpayers’ liability for basic, higher and additional rates of income tax would be 2ı per cent, 4ı per cent and 46 per cent respec- tively. Conversely, if the Scottish single rate was 9 per cent – Scottish taxpayers’ liability would be ı9 per cent, 39 per cent and 44 per cent respectively. The key question to address (and the first
level of complexity created) is of course who (or what) is a Scottish taxpayer? The good news for supporters of simplicity is that you cannot be a Scottish taxpayer if you are non-UK resident. From then on, it only gets more intricate. If you are a UK resident, then you are
a Scottish taxpayer if your sole or main residence is in Scotland. If an individual has more than one residence, with one located elsewhere in the UK, they will need
to identify which property has been their main residence for the longest period in the tax year – this determines their liability to Scottish Tax. Those individuals who are unable to identify a main place of residence will need to count their days spent in Scot- land and the rest of the UK to establish whether or not they are a Scottish taxpayer. So what does all this mean for your
practice? No doubt there will be a number of unfore- seen consequences, however, for starters, the PAYE Notice of Coding will need to distin- guish between the staff who are Scottish and non-Scottish taxpayers. If you or your practice has cross-border issues, i.e. you own a property in England or you work in England, you may need to consider the tax impact on your income. Private pension contributions will also
be affected by the new rate. The level of an individual’s pension tax relief will be driven by their individual tax position. UK pension providers will be faced with the prospect of ensuring that the correct level of reclaim is made from HM Revenue & Customs. HMRC’s technical briefing published in May 20ı2 recognised the challenges this presented to the pensions industry and announced that it would be working with industry to overcome the difficulties. Nonetheless it represents a significant undertaking. The changes are not set to take effect
until 5 April 20ı6 and we will be sure to update you on any developments. Another change which was unaf-
fected by the referendum was the introduction of Land & Buildings
Transaction Tax (L&BTT). From ı April 20ı5, L&BTT replaces Stamp Duty Land Tax (SDLT) in Scotland. SDLT (a tax paid by the purchaser of a property) was never popular among Scottish Lawyers and taxation practitioners and its passing will not be mourned. Although L&BTT looks very much like
a ‘tartan’ SDLT, there are two significant differences. Whereas SDLT was a ‘slab tax’ (i.e. if the purchaser paid £ı50k or less for a commercial building, there was no SDLT, however if he paid £ı50,00ı then ı per cent was due on the whole amount) L&BTT is a progressive tax and operates like
Income Tax. The rates are also
different, but these will not be known until later this year. Many tax practitioners are of the opinion
that L&BTT will be more expensive for higher value purchases. We shall, of course, keep an eye out for the new rates. However, if you are considering purchasing a practice which includes the owner’s freehold, it may be worth waiting until the rates are published. This then may influence the timing of your decision and lead you either to delay the purchase until after ı April 20ı5 or fast-track the transaction. Based on current political comment, the
issue of devolved powers for Scotland appears far from resolved – there may be yet more changes.
® If you have any queries about the issues raised in this article, contact Patricia Halliday at
ph@maco.co.uk or on 0141 272 0000.
Scottish Dental magazine 73
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92