Campaign highlights Scottish tax changes

By Anne-Marie Roberts, ICAS Assistant Director Taxation

6 March 2015

A UK Government campaign is launched to publicise changes to tax following the Scotland Act 2012 and Smith Commission Agreement on more devolved powers.

The UK Government has announced a public information campaign to enable people in Scotland to learn more about the devolution settlement and how it is changing through the Scotland Act.

Following the Smith Commission's paper on new powers for the Scottish Parliament, this work is intended to ensure the public are properly informed about changes to the way Scotland is governed.

Lord Smith was clear in his report that people in Scotland need a better understanding of what powers are devolved to Scotland. The UK Government has responded by setting up a blog on Tumblr to cover the issues.  

So what is the position on taxes?  What has been devolved and what remains reserved to Westminster? It is a good time for a refresher on the position as we are only weeks away from the first Scottish Taxes.

The taxes that have already been devolved to the Scottish Government are:

  • Land and Buildings Transaction Tax (LBTT)
  • Scottish Landfill Tax

These are due to go live on 1 April 2015.

The Smith Commission has recommended devolution of the following taxes at some point in the future:

  • Aggregates levy
  • Air passenger duty

No date for this transfer of powers has been set.

The position on income tax is more complex as there is partial devolution of powers to the Scottish Government. From 6 April 2016, the rate of income tax for Scottish taxpayers will be reduced by 10p and the Scottish Parliament will have the power to set its own rate – the Scottish rate of Income Tax (SRIT). The UK Parliament is responsible for the legislation on establishing the tax base and the administration of the tax.

The Smith Commission has recommended further powers over income tax rates and bands are devolved with no changes in the administrative arrangements.  No dates have been set for this.

The final category of devolution that has been proposed covers the position on VAT.  At the moment, the amount of VAT collected on behalf of the Government is not allocated on any geographical basis.  The Smith Commission has recommended that an amount of VAT attributable to Scotland should be allocated to the Scottish Government. The mechanism for arriving at this allocation has not yet been agreed and the UK Government is in the process of consulting on this issue.  No dates have been set for this.

The UK Government is keen for the public to engage and understand how devolution will work.  It is a complex issue – and we are only at the start of the process.  It will be fascinating to watch the new taxes and supporting administration develop.  You can be sure that there will be unintended consequences.


  • Tax
  • Political landscape

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