Scotland Act 2016


Susie Walker

Susie Walker

Partner & Head of Tax


The Scotland Act 2016 completed its path through Parliament last month with Royal Assent received from Her Majesty the Queen.

This Act fulfils the commitments made by the UK Government to devolve substantial powers to the Scottish Parliament, in particular the ability to set separate Scottish income tax rates and thresholds for earned income (interest and dividends will continue to be subject to the UK rates and bands).

We now await those elected to the Scottish Parliament to decide whether or not to apply these extended powers in the years ahead. 

Nicola Sturgeon has already rejected George Osborne’s plans announced in the recent UK Budget to extend the threshold for paying the higher rate level of income tax of 40p from £43,000 to £45,000, which will effectively give middle earners a tax cut south of the border. She has also rejected a tax rise for highest earners.

On the other hand, Kezia Dugdale has suggested that if Labour get into power that tax rises are needed to compensate for the latest budget passed in the Scottish Parliament which cut £500m from schools and public services. She has already said that Labour would use the powers of the Scottish Parliament to put income tax up by one pence.