Scottish Budget approved - after furore!
The Scottish Budget for 2023/24 went ahead on 15 December but only after a furore in the Scottish Parliament about leaked documents relating to the proposed tax and other announcements. But were these good or bad news if you’re a Scottish taxpayer?
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Review how much VAT charged on sales?
A recent Tribunal case ruled that HMRC’s logic was flawed in dealing with a “what is the supply” challenge. Does this mean you should check that you are charging VAT correctly on your sales if there could be doubt about what you are selling?
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Are buy-to-let companies worth the hype?
There’s no doubt that landlords have been on the receiving end of multiple tax hikes in recent years. So called “property experts” will tell you that the best tax-saving strategy is to operate through a company. Are they right?
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Electronic VAT return
Scotland determines its income tax rates for earned income (but not investment income) separately from the rest of the UK. The latest Budget announcements signalled an increase in the existing differential in rates by adding an extra percentage point to the income tax rate for many taxpayers. In addition, the earnings band at which the top rate of tax applies was reduced to mirror the change in the rest of the UK. The table below shows the current year’s income tax rates and those proposed for 2023/24.
|
|
2022/23 |
2023/24 |
||
|
Rates |
Earnings |
Tax rate |
Earnings |
Tax rate |
|
Tax -free allowance |
£12,570 |
- |
£12,570 |
- |
|
Starter |
£12,571 - £14,732 |
19% |
£12,571- £14,732 |
19% |
|
Basic |
£14,733 - £25,688 |
20% |
£14,733 - £25,688 |
20% |
|
Intermediate |
£25,689 - £43,662 |
21% |
£25,689 - £43,662 |
21% |
|
Higher |
£43,663 - £150,000 |
41% |
£43,663 - £125,140 |
42% |
|
Top |
Above £150,000 |
46% |
Above £125,140 |
47% |
Higher income tax rates weren’t the only bad news. Anyone buying a second or subsequent dwelling will have to pay more land and buildings transaction tax (LBTT). The additional rate, i.e. that paid on top of standard LBTT was hiked from 4% to 6% with effect for purchases completed after 15 December 2022.
The Scottish government’s summary of tax and other changes is available here.





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