Scottish income tax rate to remain the same next year

Scottish finance secretary, John Swinney has ruled out any increase in Scottish income tax rates when Holyrood receives its new financial powers in 2016.

Passed under the previous British coalition government, Holyrood will be given limited powers over income tax rates in Scotland next April under the 2012 Scotland Act.

The Treasury will deduct from the Scottish block grant a sum equivalent to the product of 10p worth of income tax north of the border.

Mr Swinney has since had the choice of setting a Scottish Rate of Income Tax (SRIT), which could either be lower, higher or the same as the 10p that has been deducted.

The announcement was made during Mr Swinney’s draft budget to MSPs in the Scottish Parliament; during which he announced a tax rise on a number of second homes and buy-to-let properties via a new Land and Buildings Transaction Tax levy.

Mr Swinney told the Holyrood chamber: “I propose that the Scottish Rate of Income Tax will be set at 10p in the pound – the rate people pay this year will be the same rate that they will pay next year.

“I hope that from 2017/18 this parliament will have more flexibility in setting income tax rates.

“However, that will depend on reaching agreement on a new fiscal framework and final passage of the Scotland Bill.”

The finance secretary confirmed that the Scottish government would set out its longer term plans on SRIT ahead of the dissolution of the Scottish Parliament in March 2016.

He stated the aim was to focus on tackling inequality and boosting productivity in order to “create the foundations for a stronger and more inclusive economy”.

Some of the other measures proposed by Mr Swinney included:

• Council tax to be frozen for a ninth successive year

• A review of the business rates system to be kick-started

• A new three per cent Land and Buildings Transaction Tax levy on the purchase of many second homes from April 2016

• A commitment to increase free childcare for three-to-four year-olds to 1,140 hours per year in the next parliament

• College funding to be protected, and commitment to free tuition to continue

Last updated: 16th December 2015