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Scottish Budget: Taxes up for the well paid | accountingweb
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Scottish Budget: Taxes up for the well paid

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Thursday’s Scottish Budget saw Deputy First Minister John Swinney increase taxes for higher earners and those buying second homes.

16th Dec 2022
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The Scottish Government is facing the same inflationary pressures as the rest of the UK, but it has chosen a different approach to the Conservative government in Westminster, by increasing taxes on higher earners and purchasers of second homes. 

Scottish income tax

The Scottish Nationalists govern Scotland in conjunction with the Green Party, and this coalition has a progressive approach to taxation. The Budget statement emphasises the limited powers the Scottish Parliament has over taxes, as the Scottish income tax rates are only applied to earnings and profits. The tax rates and bands applied to dividend income, savings, capital gains and national insurance are determined by the Westminster government.

Scotland’s Deputy First Minister, John Swinney has followed Jeremy Hunt’s lead in reducing the threshold for the highest tax band to £125,140. However, higher-paid taxpayers will see their highest marginal rate rise by one percentage point from 41% to 42% for higher-rate tax and from 46% to 47% for the top rate. 

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Replies (22)

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paddle steamer
By DJKL
16th Dec 2022 18:56

Well paid is £43,662, really!!!!!!!

Couple that 42% with 12% NI and if a graduate with a student loan another 9% and that gives an eye watering marginal rate up to £50,268 of 63%.

On £43,662 you might on say 4 times earnings and a deposit scrape together enough for a reasonably nice area one bed flat in Edinburgh, if £43,662 is well paid all the MSPs can obviously cut their salaries to £43,662 (and hee haw ropey expenses to sweeten the package)

Swinney is a total *****, thank god I had an English father , at least this will grant me residence south of the border in the bleak future. The Nats are bleeding the middle dry up here (the lower band than rUK until 40%/42% is already painful), nothing smart in their economics, tax and take,tax and take, and the reason they manage it is The Conservatives are a useless group of *****
and Labour could bore for Europe, accordingly they get every idiot up here to vote for them, if the taxes do not hit them individually they do not care.

Bah, humbug, **** Swinney, ten minutes in a room together and he would really get a good piece of my mind.

Thanks (9)
Replying to DJKL:
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By mumpin
17th Dec 2022 16:43

Sunsh i t e on Leith!
It won't bother the numpties who vote Nat.
We need a Unionist party because the SNP have made politics a single issue matter and they won't accept the democratic will of the people as expressed in 2014.

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By carnmores
16th Dec 2022 19:41

just wait till independence, a return to 80%. halcyon days I think not

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By Philysis
16th Dec 2022 21:21

More tax Bands is more complication , they simply don’t get it in Scotland parliament and they do not serve our lovely friends and neighbours across the border , this new tax banding is smoke and mirrors stealth taxation on our Scottish friends , you pay more tax under snp as a Scottish resident , due to the bureaucracy and design of the bands , distill these bands on your own income tonight , you need a calculator , take a deep breath , no wonder Whitehall thinks Jimmy is a crankie . Lunatics have taken over the holy rood asylum . Madness Nicola sturgeon is an incompetent , socialist anti business , nationalist without a coherent plan for Scotland that any U.K. pm will accept nor should the Scottish , god bless the Scot’s your our friends and valued neighbours , sturgeon is not . Devolution of taxes does not work it creates inequality we are United and a kingdom . Under the U.K. a single transparent easy to understand taxation works every time. Stick together U.K.

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Replying to Philysis:
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By the_drookit_dug
16th Dec 2022 23:39

Just to add balance to this offensive nonsense: I live in Scotland and don't mind paying the extra 1%.

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Replying to the_drookit_dug:
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By Hugo Fair
17th Dec 2022 14:29
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Replying to Hugo Fair:
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By wamstax
19th Dec 2022 10:03

Oooh - I often wondered but didn't have the heart to ask.....

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Replying to the_drookit_dug:
paddle steamer
By DJKL
17th Dec 2022 23:20

It is not the 1% that is the issue it is the extra 20% on £43,662 to £50,270, £6608 @20% being an extra £1,321.60 more than those down south, then you add to that the various 1% or 2% extras, these generally are not that bad .

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Replying to the_drookit_dug:
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By wamstax
19th Dec 2022 09:57

"offensive" - maybe but "Nonsense" is way off the mark. Thought AWEB had avoided this political hoohah but it seems that they are everywhere.

I also have little option but to pay the additional 1% - if I want to live north of the border and stay UK tax resident - and would certainly not be against it if I could see it being put to good use and not used up by hidden spending on their besotted idiocy - especially when they profess to be concerned about the poorest in our society.

Let's also be honest 65% is a ridiculous level of taxation on direct salaries and profits when you need to spend it and from that 35% they then take another 21% in the form of VAT.

Stats can say anything and they are the masters of the sleight of hand with stealth taxes

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Replying to the_drookit_dug:
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By tayaccountingweb
19th Dec 2022 11:21

An increase from 41p to 42p is not a 1% increase: it is closer to 2.5%

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By Justin Bryant
17th Dec 2022 09:14

They clearly want BTL to die a death with the (crazily high in my view) 6% SDLT surcharge on additional dwellings (that could easily equate to 2 years' net rent after tax and other expenses even if unmortgaged, so why would anyone (including cash buyers) bother with that?).

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Replying to Justin Bryant:
By Ruddles
17th Dec 2022 10:18

I can imagine that there are certain areas of Scotland (and rUK for that matter) that would welcome the death of BTL. Outside of holiday season some towns and villages are little more than ghost towns. Perhaps the ADS should be used to support those local economies.

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Replying to Ruddles:
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By Justin Bryant
19th Dec 2022 09:45

But that problem can be mostly cured by, for example, applying 3x (or 4x or 5x - take your pick*) council tax for vacant/unoccupied periods of 3 months or more etc. and the problem is to an extent self-correcting, as who wants to holiday in a ghost town? The 6% rate is a baby & bathwater rate (a healthy BTL market is good for tenants as it keeps rents down, all else being equal).
https://www.legislation.gov.uk/ssi/2022/375/contents/made

*Or you could simply have this higher SDLT rate just apply to special designated holiday areas etc.

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Replying to Justin Bryant:
By Ruddles
19th Dec 2022 12:40

The point is that in holiday season the towns in question are not ghost towns.

As for a healthy BTL market keeping rents down, that doesn't really apply in towns where the properties in question are holiday rentals, second homes.

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Replying to Ruddles:
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By Justin Bryant
19th Dec 2022 12:58

I said "all else being equal".

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Replying to Justin Bryant:
By Ruddles
19th Dec 2022 13:32

Yes you did. But I was talking specifically about holiday areas, where all else is not equal.

The benefits or otherwise of a more general BTL market are for a separate discussion.

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By Mallock
19th Dec 2022 12:44

When the SNP increased the higher rate bands by 1% they actually brought in less higher rate tax and their recent move is just going to do the same thing again.

I have 2 very wealthy clients (£350K plus income) who have moved just south of the border to avoid the additional tax and with another 1% going on soon, they will be even more convinced they made the right move. There are quite a few others who are contemplating retiring south and again they are all pretty well off.

As these people move, it's not just the additional 1% the SNP lose, it is all the tax they pay and the local economy loses all their spending money.

In nearly all the cities in Scotland there is a massive shortage of rental properties and the 6% ADS is going to ensure it stays this way. I have clients who say they aren't buying any more rental properties and might even start to sell some off - this will just reduce the supply further.

Why taxation powers were given to devolved Parliaments I will never understand because it just leads to more division. The SNP bedmates, the Greens, have stated that they want to see means tested State Pensions and I have quite a few clients concerned about this which can only accelerate the exodus of wealth from Scotland.

It's OK to have a vision of a fairer society but if that just means you keep taking from those perceived to be wealthy without their consent and buy in, it is going to fail at some point. Remember that many in the "wealthy" category have only got there through an enormous amount of hard work and sacrifice - they might not be too keen to give up the fruits of their labours to many they consider haven't done enough to help themselves. There are always exceptions but after covid there are apparently more than 300,000 people in the UK who have not returned to work largely through choice.

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Replying to Mallock:
paddle steamer
By DJKL
19th Dec 2022 13:46

State pensions are not a devolved matter, only risk of any such thing is there being another indyref with a different outcome this time.

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Replying to DJKL:
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By Mallock
19th Dec 2022 17:07

I am well aware of that but it is a potential consequence of independence it it is ever achieved and at that point the exodus would be significant. I don't see Westminster making it too difficult for the wealthier in Scotland to move south and contribute their taxes to England instead but it would certainly accelerate the financial issues an independent Scotland would have.

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By unclejoe
19th Dec 2022 15:35

If you want to identify the true tax rate on employees, I would argue, you should include an adjustment for employers contributions, as well as NIC. If it costs an employer, say £100k, to employ someone it makes no difference whether, or what, part of that is deemed employer tax or employee tax. It is just smoke and mirrors, an attempt to fool the people, that gives rise to incentives to avoid employment status and all the problems of IR35. Merry Christmas and a Great New Year to all.

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By isabelm
21st Dec 2022 14:45

I thought I heard on the radio that the Additional Dwelling Supplement would be 6% on the WHOLE value of a property. Is that right or wrong please?

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Replying to isabelm:
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By Mallock
21st Dec 2022 14:47

That's quite right and it is over and above the normal LBTT

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