The Smith Commission is apparently to move Scotland closer to fiscal independence by recommending that it be given full control to set income tax rates and bands. Their report, due to be published today, is expected to confirm that the amount of the tax free personal allowance is not to be devolved.
Additionally, the Commission will recommend a shift in control of many welfare powers and air passenger duty.
Other taxes such as VAT will not be devolved.
For those practitioners working in Scotland, or with clients both sides of the border, this apparent shift towards a dual system of income tax in the UK, based on location north or south of the border, will be viewed with some trepidation.
For the vendors of UK tax packages, these changes will also herald a wakeup call.
Will practitioners in the north of England and Scotland, where these changes will be keenly felt, be placed at a competitive disadvantage? Inevitably, tax practitioners offering advice in both jurisdictions will need to wear one of two hats when calculating their clients’ income tax position.
Ironically, when looking at the UK as a whole, this will add to fiscal complexity rather than the much needed simplification of the UK tax code.
And as for England, and Wales…
No doubt there will be those who lobby hard for more, or some would say some, devolved powers for England. The Welsh Assembly will be keeping a weather eye on the detail when the Smith Report is published today. Eventually, we may be faced with four (England, Northern Ireland, Scotland and Wales) not two regimes for devolved taxes? At which point UK tax programmers may consider a strategic move to the UK’s burgeoning gaming industry, and accountants, continuing to offer cross-border income tax advice, will have to deal with the consequences…