New Regulations, which came into effect on 30th November 2016, bring Section 13 of The Scotland Act 2016 into force. 

As a result, from April 2017, the Scottish Parliament will control income tax rates and thresholds for all Scottish taxpayers. The text of the Regulations may be found here.

The new income tax powers have been formally devolved two years on from the publication of the cross-party Smith Commission’s report which, in the wake of the 2014 Scottish Independence Referendum, made recommendations as to which powers should transfer to the Scottish Parliament from the UK Parliament.

From 6th April 2017, the Scottish Parliament will have the power to:

  • Set income tax rates
  • Set income tax thresholds

It should be pointed out that the Scottish Rate of Income Tax applies only to non-savings income; it does not apply to interest on bank accounts, nor does it apply to dividends.

HMRC have issued guidance on how they intend to determine Scottish Taxpayer status, and our commentary on this can be found here.

The devolution of these income tax powers comes after a range of powers on welfare, consumer advice, Ofcom, gaming machines, equalities and transport have already been transferred to the Scottish Parliament.