Citizens’ Assembly

Charlotte Barbour Director of Taxation, ICAS Council Member CIOT

22 February 2020 UK taxes 2017-18 How much was collected? £bn Income tax ……………….... 180 ………… 131 VAT …………………………. 125 Corporation Tax …………….. 55 Capital Gains Tax ………….... 8 Property transaction taxes ..... 14 (SDLT, ATED, LBTT and LLT) Scottish taxes • • Business rates • Scottish Income Tax • LBTT • • Some VAT soon? Different types of devolved taxes

Partially devolved National UK and local rules

Fully devolved Local rules

Assigned National UK rules, with revenue shared Who gets which slice? And who sets the rules? HM Revenue and Customs

Collects UK-wide taxes: England, Scotland, Wales, Northern Ireland

• Also collects • Scottish Income Tax • Welsh Rates of Income Tax Institutions - Scotland - devolved tax policy

Revenue Scotland - collection & administration - commenced 1 April 2015

Scottish Fiscal Commission - produces Scotland’s official independent economic and fiscal forecasts Where are we now? Scottish income tax Divergence in income tax • 5 bands • more progressive rates (from 19 - 46%) Flip side of divergence • differences • tax competition • complexity Why are tax powers devolved?

To bring accountability To tie tax collection to spending decisions This is not risk free – • Will the electorate agree? • Will the tax base be as estimated? Or change? • Will tax behaviour limit collections? Messaging….. It is important that existing Scottish taxpayers understand and support their contribution to public finances It is equally important that those who may wish to move to Scotland understand:

• the purpose of Scottish taxation policy • the relationship between tax and public spending, and • the benefit that Scottish taxpayers enjoy from that public spending and different policies Tax education Scots struggle understanding devolved tax CIOT survey 2019

• 91% little or no understanding of a ‘Scottish taxpayer’ • 86% want better information • broad support for new taxes on tourism and car parking Disclaimer

Disclaimer: This presentation is intended for training purposes only and should not be relied upon by businesses or individuals or used for the purpose of advising clients. No responsibility for loss occasioned by any person acting or not acting as a result of this material can be accepted by the presenter or by ICAS.