Late February saw a historic new agreement reached between the UK and Scottish governments that devolves major new tax and welfare powers from Westminster to Scotland. After almost a year of negotiations it was agreed that Holyrood’s new, wider powers over income tax rates and thresholds will come into effect on 6th April 2017.
Scotland’s budget will be protected for the first six years after the devolution of the tax and welfare powers. The agreement was announced simultaneously in Edinburgh by Scotland’s First Minister Nicola Sturgeon and in London by the Chancellor George Osborne and will require both governments to respect a transitional period lasting until March 2022, during which the Scottish Parliament’s budget cannot be cut.
As part of the new framework, the Scottish government will keep all the devolved and assigned Scottish tax revenues. Revenues from sources such as tribunals, courts, air passenger duty and VAT will follow at later dates.