Scottish tax system: Complex and expensive

Designing a tax system for an independent Scotland would be “complex and expensive”, the Institute of Chartered Accountants of Scotland has said.

The claim came after the Scottish Government published a recent consultation on the proposed Scottish land and buildings transaction tax.

The Scottish Parliament will have new financial powers from April 2015 over taxes on land and property transactions and on disposal to landfill. The land-tax consultation - the first of three dealing with devolved tax powers - is focused on introducing a land and property tax to replace the current UK Stamp Duty Land Tax (SDLT) system.

Key proposed changes are:

• Changes to the way SDLT charges are calculated, with the proposed introduction of a progressive tax structure (so that the tax, like income tax, is only paid at the applicable rate(s) on the amount within each threshold)
• Changes to the administration of SDLT and how it links to land registration, with proposed new online arrangements

ICAS has said the Scottish Government needs to get to grips quickly with its tax system for its devolved tax powers.

An ICAS report warns that if Scotland becomes independent, designing a tax system for Scotland will potentially be “massive, complex and expensive”. 

It also says that “taxpayer profiling” will help the Scottish Government understand how any changes in allowances, tax structures, reliefs or rates will affect total tax paid.