VICTORIA MASTERSON, DEPUTY BUSINESS EDITOR
A WIDENING gap in tax policy between Scotland and the rest of the UK could lead to more relocations, yesterday’s Budget Briefing event with The Herald and Sunday Herald heard.
More than 130 delegates attended the event, at which a panel of experts analysed Chancellor George Osborne’s Budget and how it could affect Scotland, including fiscal policy, the economy and business and personal taxes.
“We already have discussions with clients who are worried about direction of travel [in Scotland] both in terms of personal taxation and other changes such as the Scottish land and buildings transaction tax,” said Fraser Campbell, a partner at accountancy firm Campbell Dallas.
“What does that mean for those individuals and clients in Scotland if they decide they want to take advantage of the lower tax regime south of border? There’s a lot of uncertainty but there seems to be a direction of travel. Any uncertainty in that direction of travel leads to different investment decisions. Doing business has always been different up here, but it’s getting more different.”
Peter Smyth, head of public affairs at PR consultancy Indigo, said: “What our public affairs clients are keen to understand is how the Chancellor’s measures will affect what John Swinney does in Scotland. They want the Scottish Government to have a joined-up plan that measures up with what Westminster is doing – rather than trying to compete with each other. Our clients want to grow and they want politicians to think strategically about how to help them do that.”
On personal tax changes, Grant Johnston, a partner at law firm Wright Johnston Mackenzie, said: “The increase in the higher rate of tax to £45,000 is very welcome and slightly more than anticipated. It’s almost throwing down the gauntlet to the Scottish Government to see if they can match it going forward. Because if they can’t match it, it will be interesting to see whether people decide to relocate.”
Professor Ronald MacDonald, from the Adam Smith Chair of Political Economy at the University of Glasgow’s Adam Smith Business School, said new policies were needed to get the economy going again. “We’ve had such a prolonged period of quantitative easing that it’s difficult to say what happens when that unwinds,” he added. “Given the potential slowdown in the world economy, the Chancellor should be thinking of a different strategy at this point.”
Derek Hanlan, director of taxation at management consultancy Craig Corporate, suggested the Chancellor’s new Lifetime ISA was a pension by another name.
“He did not mention pensions yesterday at all,” Mr Hanlan said. “That’s something that we as advisers have asked for for years. But what he then did was announce the Lifetime ISA, which works like a pension, smells like a pension and in effect gives you basic rate tax relief. It’s an alternative vehicle to provide long-term savings.”
On the reduction in corporation tax from 20 to 17 per cent, Ken Welsh, managing director of wealth management consultancy VWM Wealth, said: “I think everyone wants to see welfare cuts kept to a minimum and the economy growing as a result. Reducing corporation tax will incentivise wealth creators, who can then take on more people. More employment then shrinks the welfare budget.”