16 Mar 2016

Budget 2016: What's in it for Scotland?

Budget 2016: What's in it for Scotland?

 

A £1billion tax cut for the oil and gas sector was the headline figure for Scotland in George Osborne's Budget statement.

The package of measures - which includes cuts to the unpopular Supplementary Charge and the Petroleum Revenue Tax - follows the £1.3billion support previously announced in last year’s Budget and the £250million Aberdeen City Deal.

Scottish Secretary David Mundell said the money will help protect jobs in the north-east of Scotland.

Oil and gas changes

In his Budget statement, the Chancellor said Petroleum Revenue Tax (PRT) would be "effectively abolished", having cut it last year from 50% to 35%.

The existing supplementary charge for oil companies will also be cut from 20% to 10%, backdated to 1st January.

The UK Government will provide a further £20million of funding for a second round of seismic surveys in 2016/17.

The Budget also delivered a tax cut for 73,000 Scottish businesses thanks to the decision to reduce Corporation Tax to 17% in 2020-21.

The SNP's deputy leader Stewart Hosie welcomed the oil and gas changes. However, he said he was "slightly disappointed in the lack of strategic direction" and that there was no mention of exploration or production allowances for the industry.

Income Tax cut - but will Scots taxpayers benefit?

Mr Osborne also announced that the personal allowance will increase to £11,500 in 2017-18 - a £500 increase. The higher rate threshold will increase to £45,000 in 2017-18 - a £2,000 increase.

The change announced in the Budget to the higher rate threshold will come into force in April 2017, the same point at which the devolution of further income tax powers to the Scottish Parliament will take place.

From this date onwards it will be for the Scottish Government to set the rates and thresholds for main income. As a result, the UK Government change to the higher rate threshold in April 2017 will not apply to the main income of Scottish higher rate taxpayers.

It will be for the Scottish Government to decide whether Scottish taxpayers should benefit from lower taxes from April 2017 onwards - although the SNP has suggested it will forgo the cut if re-elected in May.

Boost for savers

From April 2017, any adult under 40 will be able to open a new Lifetime ISA. Up to £4,000 can be saved each year and savers will receive a 25% bonus from the government on this money.

Money put into this account can be saved until you are over 60 and used as retirement income, or you can withdraw it to help buy your first home.

The total amount you can save each year into all ISAs will also be increased from £15,240 to £20,000 from April 2017.

Budget 2016 Review

On Thursday, Aberdein Considine will publish a full review of the Budget and the impact it will have on savers.

To receive a copy - or to speak to one of our independent financial advisers - call 0333 0044 333 or click here.


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