ICAS ICAS logo

Quicklinks

  1. About Us

    Find out about who we are and what we do here at ICAS.

  2. Find a CA

    Search our directory of individual CAs and Member organisations by name, location and professional criteria.

  3. CA Magazine

    View the latest issues of the dedicated magazine for ICAS Chartered Accountants.

  4. Contact Us

    Get in touch with ICAS by phone, email or post, with dedicated contacts for Members, Students and firms.

Login
  • Annual renewal
  • About us
  • Contact us
  • Find a CA
  1. About us
    1. Governance
  2. Members
    1. Become a member
    2. Newly qualified
    3. Manage my membership
    4. Benefits of membership
    5. Careers support
    6. Mentoring
    7. CA Wellbeing
    8. More for Members
    9. Area networks
    10. International communities
    11. Get involved
    12. Top Young CAs
    13. Career breaks
    14. ICAS podcast
    15. Newly admitted members 2022
    16. Newly admitted members 2023
  3. CA Students
    1. Student information
    2. Student resources
    3. Learning requirements
    4. Learning updates
    5. Learning blog
    6. Totum Pro | Student discount card
    7. CA Student wellbeing
  4. Become a CA
    1. How to become a CA
    2. Routes to becoming a CA
    3. CA Stories
    4. Find a training agreement
    5. Why become a CA
    6. Qualification information
    7. University exemptions
  5. Employers
    1. Become an Authorised Training Office
    2. Resources for Authorised Training Offices
    3. Professional entry
    4. Apprenticeships
  6. Find a CA
  7. ICAS events
    1. CA Summit
  8. CA magazine
  9. Insight
    1. Finance + Trust
    2. Finance + Technology
    3. Finance + EDI
    4. Finance + Mental Fitness
    5. Finance + Leadership
    6. Finance + Sustainability
  10. Professional resources
    1. Anti-money laundering
    2. Audit and assurance
    3. Brexit
    4. Business and governance
    5. Charities
    6. Coronavirus
    7. Corporate and financial reporting
    8. Cyber security
    9. Ethics
    10. Insolvency
    11. ICAS Research
    12. Pensions
    13. Practice
    14. Public sector
    15. Sustainability
    16. Tax
  11. CPD - professional development
    1. CPD courses and qualifications
    2. CPD news and updates
    3. CPD support and advice
  12. Regulation
    1. Complaints and sanctions
    2. Regulatory authorisations
    3. Guidance and help sheets
    4. Regulatory monitoring
  13. CA jobs
    1. CA jobs partner: Rutherford Cross
    2. Resources for your job search
    3. Advertise with CA jobs
    4. Hays | A Trusted ICAS CA Jobs Partner
    5. Azets | What's your ambition?
  14. Work at ICAS
    1. Business centres
    2. Meet our team
    3. Benefits
    4. Vacancies
    5. Imagine your career at ICAS
  15. Contact us
    1. Technical and regulation queries
    2. ICAS logo request

Devolving powers across the UK

  • LinkedIn (opens new window)
  • Twitter (opens new window)
Charlotte Barbour - NEW profile picture By Charlotte Barbour CA CTA (Fellow), Director of Taxation, ICAS

21 July 2020

Key points:

  • The UK needs a logical and consistent strategic framework to support tax devolution
  • A single autumn UK budget is essential to support the devolved nations in making effective tax policy
  • ICAS calls for public discussion and better understanding of the role of tax in supporting public services across the UK and devolved jurisdictions

Charlotte Barbour outlines policy proposals put forward by the ICAS Tax Board about the devolving of tax powers across the UK.

What has ICAS recommended?

  • There should be a logical and consistent strategic framework for the devolution of tax powers across the UK
  • Closer working between Westminster and devolved governments should be encouraged to ensure that UK tax decisions take account of the consequences for devolved taxes
  • A more realistic timeframe for UK and devolved Budgets should be put in place
  • A commitment to hold the UK Budget early in the autumn would assist devolved governments
    A number of tax powers have been devolved in recent years to different regional governments; however, this has raised questions about whether the approach to tax devolution should be more consistent across the UK. For example, is it sensible to devolve varying tax powers to different parts of the UK? Corporation tax is being devolved to Northern Ireland but has not been devolved to Scotland or Wales. Income tax rates have been devolved (but not in the same way) to Scotland and Wales - but have not been devolved to Northern Ireland.

Coordination

There appears to be little central coordination of the powers devolved; nor is there adequate consideration of how devolved rate setting affects the underlying tax base. For instance, the UK basic rate of income tax (20%) is used for giving tax relief at source but in Scotland the relevant rate may be the intermediate rate (21%). There are practical procedures in place to assist with administration but, longer term, proper consideration needs to be given to how devolved tax powers interact with the UK tax framework, and whether the UK framework adequately supports devolution. Ideally, there should be a logical and consistent strategic framework for the devolution of tax powers across the UK.

Income tax and national insurance

It is sometimes suggested that NICs are simply another tax and should be merged with income tax, although many members of the public continue to believe that NICs pay for healthcare and pensions. Various government commissioned reviews have illustrated that merging the two would not be straightforward. Devolution adds further complexity because key elements of income tax (the rates and thresholds) are devolved but NICs are reserved. There has been considerable work by the Office of Tax Simplification (OTS) in recent years to examine how income tax and NIC processes could be aligned to improve administration, but a different approach may be required as the two charges increasingly diverge from one another. Divergence manifests itself in the NIC thresholds and their interaction with the income tax higher rate threshold. It also arises at a policy level: in England, in addition to suggestions for merging NICs and income tax, it has also been proposed to ‘hypothecate’ NICs and increase them specifically to fund healthcare. This appears odd in Scotland because healthcare is a devolved competence whilst NICs are reserved.

Wider implications

As a result of devolution and the overlap between devolved and reserved matters, the UK should also consider its processes for implementing new tax policy and introducing tax legislation.  Something that initially appears to relate to reserved tax may, on closer inspection, affect a devolved policy (whether tax or a related matter, such as the apprenticeship levy). This requires closer working between Westminster and the devolved administrations to ensure that UK tax decisions take account of the consequences for devolved taxes.

The budget timetable

A realistic timeframe for UK and devolved Budgets should be put in place; this may require a more formal process, designed to enable maximum collaboration between governments. As a starting point a commitment to hold the UK Budget early in the autumn would assist the devolved administrations in preparing and presenting their own Budgets. It would also allow adequate time for proper scrutiny, which would support accountability in the devolved jurisdictions.

We believe there are benefits to be gained from adopting the above recommendations, and these would include:

  • Reducing the risk of unintended consequences arising from a failure to consider the impact of UK changes on devolved matters
  • Encouraging better public understanding of tax policy and tax collection across the UK and how these are used to support public spending
  • Providing adequate time for devolved Budgets to be presented and properly scrutinised, which would support accountability in the devolved jurisdictions

Join the debate

The recommendations in the ICAS Future of Tax paper were agreed by the ICAS Tax Board in 2020 and inform the work of ICAS Tax. They will be reflected upon and revised to reflect economic, social and political developments.

Please send us your feedback and comments by emailing tax@icas.com or login to the CA Connect forum, an area  exclusive to members where you can post your views and discuss with others.

There are also opportunities to join ICAS tax committees to discuss these recommendations and many other tax policy and practical matters – email tax@icas.com to find out more about being a committee member.

Devolution of income tax

By Donald Drysdale for ICAS

17 January 2020

ICAS submits views to Advisory Group on Economic Recovery in Scotland

By Charlotte Barbour and Alice Telfer

5 June 2020

2022-11-mitigo 2022-11-mitigo
ICAS logo

Footer links

  • Contact us
  • Terms and conditions
  • Modern slavery statement
  • Privacy notice
  • CA magazine

Connect with ICAS

  • Facebook (opens new window) Facebook Icon
  • Twitter (opens new window) Twitter Icon
  • LinkedIn (opens new window) LinkedIn Icon
  • Instagram (opens new window) Instagram Icon

ICAS is a member of the following bodies

  • Consultative Committee of Accountancy Bodies (opens new window) Consultative Committee of Accountancy Bodies logo
  • Chartered Accountants Worldwide (opens new window) Chartered Accountants Worldwide logo
  • Global Accounting Alliance (opens new window) Global Accounting Alliance
  • International Federation of Accountants (opens new window) IFAC
  • Access Accountancy (opens new window) Access Acountancy

Charities

  • ICAS Foundation (opens new window) ICAS Foundation
  • SCABA (opens new window) scaba

Accreditations

  • ISO 9001 - RGB (opens new window)
© ICAS 2022

The mark and designation “CA” is a registered trade mark of The Institute of Chartered Accountants of Scotland (ICAS), and is available for use in the UK and EU only to members of ICAS. If you are not a member of ICAS, you should not use the “CA” mark and designation in the UK or EU in relation to accountancy, tax or insolvency services. The mark and designation “Chartered Accountant” is a registered trade mark of ICAS, the Institute of Chartered Accountants of England and Wales and Chartered Accountants Ireland. If you are not a member of one of these organisations, you should not use the “Chartered Accountant” mark and designation in the UK or EU in relation to these services. Further restrictions on the use of these marks also apply where you are a member.

ICAS logo

Our cookie policy

ICAS.com uses cookies which are essential for our website to work. We would also like to use analytical cookies to help us improve our website and your user experience. Any data collected is anonymised. Please have a look at the further information in our cookie policy and confirm if you are happy for us to use analytical cookies: