Wylie & Bisset: UK Budget leaves many Scots facing a widening income tax gap
Chartered accountants Wylie & Bisset has said that Rishi Sunak’s maiden Budget speech still leaves many Scots facing the impact of the widening income tax gap.
The coronavirus was naturally the focus of much of the Budget, with significant funding pledges for those affected by the virus, whether employee or business owners.
Catherine McManus, head of tax at Wylie & Bisset, notes that some of these pledges are only relevant south of the border, so we will need to see if Scotland will follow on from the wider measures introduced.
She said: “From a tax perspective, we already knew much of what was coming. We knew he was probably not going to tinker with income taxes south of the Border, which for us in Scotland still leaves many of us facing the impact of the widening income tax gap.
“Equally, we knew that he was going to freeze the corporation tax rates for companies. From a review of the impact notes, it is this freeze on corporation tax that will bring in much-needed cash to fund some of the spending measures.”
Ms McManus notes that the freeze on duties will be welcome to the Scottish food and drinks industry and broadening of tax reliefs, such as the tax credit on R&D and the increase in rate on the structures and buildings allowance, will all bring benefit to those able to make use of those types of relief.
She added: “For those who were previously worried about pension relief changes, the news that the thresholds for reducing relief limits is increasing was a welcome announcement, albeit the minimum allowance can now be reduced to £4,000.
“While the Chancellor made a nod to getting rid of Entrepreneurs’ Relief, he didn’t quite go as far as abolishing it. However, with a significant narrowing of its scope and the changes effective from Budget day, it will impact not only those considering future deals but those with deals already in the pipeline with a target completion pre 5 April.
“Those who think they may have taken measures to prepare for this should be aware of the anti-forestalling provisions set out in the detailed technical note. Interestingly, the expected yield from this measure is expected to be just £220M up to 5 April 2021.
“We think there is future planning to be considered in this area and we will be working closely with clients to ensure their impact is as minimal as possible going forward. As always, we welcome the opportunity to assist clients with wider tax planning.”