This article was written in advance of the 2017 Scottish Budget. Click here for full analysis of what was announced.

For those who like Budgets, Christmas comes early in Scotland! Hot on the heels of what was largely a "steady-as-you-go" UK effort, this week's Scottish Budget (on Thursday 14th December) may well produce meatier fare.

After freezing the higher rate threshold for income tax this year, indications are that there may be actual changes to income tax rates next year.

A full buffet of options was laid out in a paper from the Scottish Government just last month, accompanied by reminders of what the other Scottish parties had proposed. The models put forward virtually all involve higher tax for many taxpayers; and all involve an increase in the top rate of tax from its current 45%. The possibility of additional tax bands, at rates between the current basic, higher and additional rates, also features heavily.

The Scottish rates will only affect the "Scottish taxpayer", who can in complex cases be a slippery customer, but on a basic level involves those whose home is regarded as being in Scotland. In addition, Scottish rates only affect non-savings income, essentially that earned from employment, self-employment, pensions and rent - so Scottish taxpayers will almost always have income affected by UK rates as well. Tax looks likely to get a bit more complicated for many, as well as a bit more expensive for some.

In addition, there may be some reaction to the UK introduction of a relief from stamp duty land tax for first-time buyers, in Scotland's own land and buildings transaction tax. Tax devolution will extend further with air departure tax; and the vital subject of business rates should receive some further attention. Add in any changes for landfill tax and possible announcements about aggregates levy and Finance Minister Derek McKay has a bulging sack of possible presents (or not) to deliver on Thursday.


Alan Barr