What preceded the Scottish Budget 2020 was more entertaining than the speech itself earlier this month. 

Calamity unfolded on the eve of the Draft Budget on 6 February 2020 after revelations broke in the papers. 

Finance Secretary Derek Mackay quit hours before delivering his speech after being exposed as a text pest by the Scottish Sun

Finance minister Kate Forbes admirably stepped in to announce the spending plans for 2020/21.  

Whether it was Forbes or Mackay didn’t matter a jot, with Westminster’s plans for 2020/21 yet to be announced. 

Spring Budget 2020 is pencilled in for Wednesday 11 March and that appears in jeopardy, too. 

Sajid Javid resigned his position as chancellor and was swiftly replaced by Rishi Sunak, a relative unknown. 

Whether Sunak rips up Javid’s speech and starts again or implements his predecessor’s plans remains to be seen. 

Income tax in Scotland

Indications from Westminster are that the personal allowance will remain at £12,500 for 2020/21. 

No changes were made to the income tax rates, while no new bands were introduced or removed.

The Scottish income tax thresholds where the two upper rates kick in were frozen. Thresholds below that were tweaked in line with inflation.

Income tax bands – 2020/21  Threshold Rate
Personal allowance Up to £12,500 Nil
Starter-rate Over £12,500 to £14,585 19%
Basic-rate Over £14,585 to £25,158 20%
Intermediate-rate Over £25,158 to £43,430 21%
Higher-rate* Over £43,430 to £150,000* 40%
Top-rate* Above £150,000 41%

*The personal allowance reduces by £1 for every £2 earned over £100,000.

National insurance contributions

Bigger changes are coming to national insurance contributions (NICs) for 2020/21. Not just in Scotland, throughout the UK. 

The £8,632 threshold at which both employees and the self-employed start paying NICs rises to £9,500 from 6 April 2020. 

Westminster claims the move will save employees £104 a year and the self-employed £78 a year. 

The Government also plans to raise the national insurance threshold to £12,500 in the next few years.

Land and buildings transaction tax

Forbes announced in the Scottish Budget 2020 that land and buildings transaction tax for residential property will be unchanged.

However, a new 2% band for non‑residential leases, applying to transactions where the net present value of rental income over the period of the lease is above £2m.

Spring Budget 2020

As it stands, rates and thresholds involving other tax measures that affect Scotland will be revealed on 11 March. The recent revelations in Westminster, however, has cast doubt over whether or not it will go ahead.

If it does we will, of course, communicate any changes to you online, via email, with a Spring Budget report, and a 2020/21 tax card.

For more information on how these changes affect you, or for personal tax-planning advice, or email us at contact@thomasbarrie.co.uk or call us on 0141 221 257.