Scotland's future tax regime

By Donald Drysdale

14 October 2014

Donald Drysdale CA on impending changes to the taxation system in Scotland

Practitioners whose clients have interests in Scotland are likely to have their work cut out trying to keep abreast of forthcoming tax changes.

Although Scotland has decided to remain part of the United Kingdom, there are still many big questions on tax in Scotland that remain unanswered. These relate to new tax-raising powers already devolved, and further devolution promised during the referendum campaign.

Devolved powers already exist to replace Stamp Duty Land Tax and Landfill Tax north of the border. Their replacements, Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax (SLfT), will be introduced on 1 April 2015. LBTT will be administered by the Registers of Scotland and SLfT by the Scottish Environment Protection Agency, both under the supervision of Scotland's new tax authority, Revenue Scotland.

The Scottish rate of income tax is due to be implemented on 6 April 2016 as part of the UK tax regime administered by HMRC. The 'non-savings income' of individuals who are 'Scottish taxpayers' (as defined) will be taxed at the Scottish main rates, calculated by reducing each of the basic, higher and additional rates of income tax by 10 pence in the pound and adding to each the Scottish rate set by the Scottish Parliament. This will allow Holyrood to cut each of the effective main rates by up to 10 percentage points – or increase them by any amount without limit!

Following defeat of the pro-independence campaign in the face of promises of change within the Union, we may now expect further tax-raising powers to be devolved from Westminster to Holyrood. This is being considered by the new Scottish Devolution Commission under Lord Smith of Kelvin CA, due to report by the end of November. Separate calls for more devolution to the English regions may prolong their deliberations.

To help taxpayers and their advisers deal with immediate and future changes, I am pleased to be working with Bloomsbury Professional as Series Editor of their new Scottish Tax Series, launching this month with a set of core tax annuals specifically focused on the needs of practitioners with Scottish-based clients.

The set includes titles on the unique Scottish issues affecting Inheritance Tax and Trusts & Estates, and detailed information on the Scottish rate of income tax, together with titles on other key UK taxes – corporation tax, capital gains tax and VAT. In addition, new titles on Land and Buildings Transaction Tax and the Management of Taxes in Scotland will follow early in 2015.

To find out how Bloomsbury Professional can help you keep abreast of Scotland's evolving tax regime, please visit their website at

About the Author
Donald Drysdale, a former tax partner at KPMG in Glasgow and later Assistant Director of Tax and ICAS, is a freelance author. He is Series Editor of Bloomsbury Professional's Scottish Tax Series and author of their Corporation Tax 2014/15 annual.


  • Tax
  • Political landscape

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