Commenting on the fiscal framework agreement published last week, Stephen Hay, RSM’s head of hax in Scotland commented:
‘We finally saw agreement reached between the Scottish and UK Governments this week after months of talks and at least ten separate meetings. The agreement between the parties was published on February 25 and meets the principles outlined in the Smith Commission recommendations.
‘While further details of the agreement covering operational and governance aspects will be published shortly, in the meantime an agreement is in place for the next five years on how the block grant will be funded. Thereafter there will be an independent review on how the block grant adjustments will be made. In the meantime the Barnett formula will remain.
‘To recap, the Scottish Rate of Income Tax (SRIT) will come into force from April this year. Following Budget approval by the Scottish Parliament earlier this week, the rate has been set at 10p in the pound, meaning that, for now at least, the income tax paid by Scottish residents will be exactly the same as in the rest of the UK.
‘Now that the fiscal framework deal has been agreed, the Scotland Act 2016 can now proceed and full devolution of income tax rates and thresholds for non-savings and non-dividend income will commence in April 2017.
‘This should allow all the Scottish political parties to publish their manifestos in advance of the Scottish Election in May with certainty on their favoured tax policies. While we have already had a flavour from the opposition parties, we await with interest the SNP proposals. Let the battle commence.’