25 Mar 2018

Scottish taxes since devolution

15 February 2017

Flower of Scotland


  • Scotland Act 1998 provided the power to vary the basic rate of income tax.
  • Revenue Scotland and the Scottish tax tribunals were established by the RSTPA 2014.
  • Only Scottish landfill tax and land and buildings transaction tax are fully devolved.
  • Unlike in the rest of the UK, in Scotland the higher rate income tax threshold will be restricted to £43,000.
  • Effect of devolving some taxes to Wales and Northern Ireland.

Until now Scotland’s tax rates have remained consistent with those in the UK. But in his draft Budget on 15 December 2016, Scottish finance secretary Derek Mackay signalled that this may change when he proposed a reduced higher rate threshold for Scottish income taxpayers.

This announcement, in what was otherwise a relatively bland affair, was seized on by the media in the rest of Britain. However, the proposal is not a fait accompli: two votes have to be held to approve the Budget in Scotland’s parliament – one on the Budget generally and one on the tax proposals.



This is the first time that Scotland has been inclined to move away from the UK’s rate of income tax since the Scotland Act 1998 established the Holyrood parliament and devolved some powers to it. However, no taxing powers were included in this devolution, apart from for local taxation and to vary the basic rate of income tax – the Scottish variable rate.

Scotland never exercised its power to vary the basic rate and questions ...

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