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How would an independent Scotland use tax powers?

The UK tax system is one of the most complicated in the world. With independence Scotland will have the ability to develop a simpler tax system that is better suited to our economy.

With its current powers, the Scottish Parliament has frozen council tax and delivered the most competitive business rates in the UK. The current Scottish Government has already legislated to replace UK Stamp Duty Land Tax with a new and fairer Land and Buildings Transaction Tax and has made clear its intention to use the opportunities of independence to reduce Air Passenger Duty and Corporation Tax to boost the economy.

Independence will make the Scottish Parliament responsible for its own finances and will provide access to the key economic levers, including taxation, to give Scotland the opportunity to develop policies to stimulate the economy, sustain Scotland’s public services and build social cohesion.

Source: Scotland's Future, Scottish Government, November 2013.

What will tax rates be in an independent Scotland?

On independence, Scotland will inherit the tax system and the prevailing UK rates and thresholds for all taxes. Decisions on specific taxes – including tax rates, allowances and credits – will be made by the Parliament and Government of an independent Scotland. For the first time ever there will be a guarantee that taxes will be set by a government that has the support of the people of Scotland.

Independence will provide the Scottish Government and Parliament with the powers to set tax rates and thresholds which are right for Scotland, allowing Scottish Ministers to develop policies that will deliver sustainable economic growth and a fair society.

Source: Scotland's Future, Scottish Government, November 2013.

Would the current rates and thresholds for personal income tax be altered or would there be any significant changes in the rates of insurance premium tax, VAT or employers’ National Insurance contributions?

Detailed policies on tax and spending will be set out in party manifestos for the 2016 election and thereafter in the first budget in an independent Scotland. There is no requirement to increase the general rate of taxation to pay for the services we currently enjoy in Scotland.

The current Scottish Government’s approach to tax is focused on fairness and economic growth. In Chapter 3 of this paper we set out our early priorities for taxation, were we to form the first government of an independent Scotland.

Source: Scotland's Future, Scottish Government, November 2013.

How much tax does Scotland currently pay into the UK?

In 2011/12, Scotland contributed £56.9 billion in tax revenue to the UK including a geographic share of North Sea oil. This is the equivalent of £10,700 per person and compares to £9,000 per person in the UK as a whole.

Scotland is estimated to have paid more tax than in the UK as a whole every year since 1980/81, averaging over £1,350 a year higher over that period when adjusted for inflation.rities for taxation, were we to form the first government of an independent Scotland.

Source: Scotland's Future, Scottish Government, November 2013.

Will the way I pay tax change if Scotland becomes independent?

Initially on independence, you will continue to pay your tax and receive tax credits in the same way as you do now. Behind the scenes, we will be working to transition the administration of the tax system to Revenue Scotland, the Scottish tax authority, with a view to making the system simpler and more efficient for the taxpayer.

Source: Scotland's Future, Scottish Government, November 2013.

How would an independent Scotland improve on the UK tax system?

Independence will enable the Scottish Parliament to set all taxes in a way which stimulates economic growth, sustains the public services of Scotland and builds social cohesion. The design of a tax system will be decided by the elected Government and Parliament of an independent Scotland.

The Scottish Government is already reforming aspects of the Scottish taxation system with the new powers devolved by the Scotland Act 2012. This process has been informed by the knowledge and participation of a range of experts and representatives of civic Scotland. The current Scottish Government plans to follow this model of collaborative tax policy development to design a simpler Scottish tax system to replace the complex UK tax code.

Source: Scotland's Future, Scottish Government, November 2013.

How will tax collection be improved in an independent Scotland?

The opportunity to create a tax system that is less cumbersome and less open to avoidance is a benefit of independence. The Scottish Government is setting up a tax authority in Scotland, Revenue Scotland, which will provide the foundations for a tax administration system for all taxes in Scotland. Revenue Scotland will be collecting devolved taxes from April 2015.

There will be a transition phase after independence where, by agreement with HM Revenue & Customs, taxes would continue to be collected through existing HMRC systems. Scotland specific arrangements will be put in place for the collection of all taxes in Scotland as quickly as possible

Following independence we plan to build on the recommendations of the Fiscal Commission report on tax. These include deploying modern technologies, such as online filing. Over the course of the first independent Parliament, the Scottish Government and Revenue Scotland would work together to pursue opportunities for simplification of taxes and tax collection, with the aim of collecting up to £250 million a year of additional revenues, without increasing tax rates.

Source: Scotland's Future, Scottish Government, November 2013.

How long will it take to set up a distinct Scottish tax system following independence?

The Scottish Parliament will have formal legal responsibility for all taxes upon independence. The Scottish Government will make arrangements that will maximise its discretion over the tax system while HMRC continue to collect tax revenues for a transitional phase.

After the transition, Revenue Scotland will collect all taxes in Scotland. We plan that the collection system for personal taxes in Scotland will be in place within the first term of the Scottish Parliament in an independent Scotland.

We will maintain stability of collection for business taxes while we carry out fundamental work with businesses to implement a streamlined collection system.

Source: Scotland's Future, Scottish Government, November 2013.

How much will it cost Scotland to run its own tax system?

The UK tax system is complex and costly. It is widely accepted that there is considerable room for improvement in its design and operation.

Revenue Scotland, working with Registers of Scotland and the Scottish Environment Protection Agency, will set up the necessary administrative systems for Land and Buildings Transaction Tax and Scottish Landfill Tax and cover the basic cost of administration for the first five years of operation for £16.7 million. This is 25 per cent less than HMRC estimated for the cost of setting up and operating for five years in Scotland like-for-like equivalents of Stamp Duty Land Tax and UK Landfill Tax.

Building on that, we will create a tax system in Scotland that is simpler and costs less to administer than the current UK system.

Source: Scotland's Future, Scottish Government, November 2013.

Will I pay more tax after independence?

The process of becoming independent will not, in itself, change the tax you pay. There is no requirement to increase the general rate of taxation to pay for the services we currently enjoy in Scotland.

As is the case in any country, overall tax levels will be set by the government and parliament of the day in response to the needs of the economy and the public services that the Scottish people want.

Source: Scotland's Future, Scottish Government, November 2013.

How will taxes be administered for businesses with headquarters in Scotland but offices in England or elsewhere?

In the interconnected global economy many companies already operate across a number of different countries without difficulty. The Scottish Government has made clear its intention to ensure an independent Scotland remains an attractive and competitive place to do business.

The Scotland Act 2012 means that by 2016, whatever the result of the referendum, there will be differences between the tax systems in Scotland and the rest of the UK. Preparations are in hand to make sure that administration is as simple as possible for businesses in Scotland and elsewhere.

Following a vote for independence, the Scottish Government will seek a double taxation agreement with the Westminster Government. It will be in the interests of both Scotland and the rest of the UK to ensure that cross-border tax affairs for companies and individuals operating in both jurisdictions are as fair and simple as possible.

Source: Scotland's Future, Scottish Government, November 2013.

Will Scottish taxpayers with overseas interests continue to be protected from double taxation after independence?

Yes. The Scottish Government is committed to a tax system that will ensure fairness for cross-border taxpayers, including those due to pay tax in both Scotland and the rest of the United Kingdom.

An independent Scotland will signal its intention to adhere to all international tax treaties in force between the UK and third party states, so that these treaties can continue in force between Scotland and that state. This was what happened, for example, when the Czech Republic and Slovakia adopted the double taxation agreement between the United Kingdom and Czechoslovakia in 1993.

Source: Scotland's Future, Scottish Government, November 2013.

What tax relief would be available to specific sectors in an independent Scotland?

At the moment of independence, Scotland will inherit the tax system and the prevailing UK rates and thresholds for all taxes, including tax reliefs. Thereafter decisions on the tax system and all specific taxes – including tax rates, allowances and credits – will be made by the Parliament and Government of an independent Scotland.

Source: Scotland's Future, Scottish Government, November 2013.

Would the main business rates in an independent Scotland continue to match England?

The Scottish Government has committed to match the poundage for business rates in England for the rest of this parliamentary term. The Scottish Government is also delivering the most competitive business rates regime in the UK with our support for the Small Business Bonus, which currently helps 92,000 businesses.

Our policy is that taxes in Scotland should be competitive to create an attractive business environment, while ensuring that companies pay their fair share of taxes.

Source: Scotland's Future, Scottish Government, November 2013.

Would the fuel duty rate be altered following independence?

With independence we will examine the benefits of introducing a fuel duty regulator mechanism to stabilise prices for business and consumers.

Source: Scotland's Future, Scottish Government, November 2013.

Who would be liable to pay Scottish taxes?

The Scottish Government will build on the existing definition set out in the Scotland Act 2012 and general international protocols to establish a definition of a Scottish taxpayer based on residence. In general, this means that people who live in Scotland for most of the year will pay their taxes here. Where people split their time between Scotland and other countries, including England, Wales and Northern Ireland, there will be clear rules set out in statute to determine which tax authority they pay their taxes to.

Source: Scotland's Future, Scottish Government, November 2013.