Following the passage of the Scotland Act 2012 Scottish Ministers will have the powers to administer taxes (the “devolved taxes”) to replace the UK Stamp Duty Land and Landfill Taxes. These powers will take effect from 1 April 2015.
Devolved taxes
The Cabinet Secretary for Finance, Employment and Sustainable Growth set out the Scottish Government plans in a statement to the Scottish Parliament about the devolved taxes on Thursday 7 June 2012. The Cabinet Secretary confirmed that the Scottish Government will introduce replacement taxes on disposals to landfill and on land and property transactions. The replacement taxes will be embedded in Scots law and practices. He also confirmed that the taxes will be administered and collected in Scotland through the establishment of Revenue Scotland, which would work with Registers of Scotland and the Scottish Environment Protection Agency to collect the devolved taxes.
The Cabinet Secretary also launched the Taking Forward a Land and Buildings Transaction Tax Consultation paper on 7 June 2012. This consultation closed on 30 August 2012. The Land and Buildings Transaction Tax (Scotland) Bill was introduced to the Scottish Parliament on 29 November 2012
The Cabinet Secretary outlined the Scottish Government’s plans for a replacement tax relating to the disposal of waste to landfill when he launched the Protecting our Resources -Consultation on a Scottish Landfill Tax on 25 October. This consultation closes on 15 January 2013.
The Cabinet Secretary launched a consultation establishing Revenue Scotland to administer taxes devolved under the Scotland Act 2012 on 10 December 2012. A consultation on Tax Management closes on 12th April 2013.
Scottish rate of income tax
The Scotland Act 2012 also introduces the Scottish Rate of Income Tax (SRIT) which, under current constitutional arrangements, will take effect from 1 April 2016. This is part of the existing UK income tax model and is not a devolved tax.
Scottish Ministers will be able to vary the rate of the Scottish Rate of Income Tax, however, it will continue to be collected by HMRC. A Memorandum of Understanding has been agreed between the Scottish Government and HMRC to aid this process.
Future changes
The Scottish Government believes that the Scottish Parliament should be responsible for the full range of taxes levied in Scotland. At the present time, despite our strong arguments for the devolution of full fiscal responsibility to enable us to improve the Scottish economy, the Scottish Government has no further responsibilities for tax. The Scotland Act 2012 does confer a power on Scottish Ministers to introduce new taxes with the agreement of the Scottish and Westminster Parliament. The Scottish Government will consult widely on any proposals for new taxation.
The UK Government remains responsible for Stamp Duty Land Tax and Landfill Tax until 2015 and may introduce changes to them prior to the introduction of replacement Scottish taxes from 1 April 2015.