Government 'to bear tax move costs'

Nov 21 2012

The Scottish Government will have to pick up the cost of implementing any changes in income tax north of the border, a senior official has told MSPs.

Ministers at Holyrood will get new responsibility for setting the tax under the terms of the Scotland Act.

But MSPs were told that varying income tax north of the border either up or down would increase administration costs.

Edward Troup, the man with responsibility for the collection of the Scottish rate of income tax at HM Revenue and Customs (HMRC), said they would look to the Scottish Government to pay for those.

Mr Troup, who was appearing before MSPs for the first time, explained part of HMRC's budget was set aside for the cost of implementing any tax changes announced by the UK Chancellor.

However, he told MSPs: "We will carry no reserve for changes to the Scottish rate. We would come back explicitly and say 'you have made a change which will cost us X million pounds, that is to be reimbursed'."

As part of changes being made to devolution, ministers will get new responsibility for the tax rate north of the border.

Income tax in Scotland will be reduced by 10%, with the Scottish Parliament then responsible to bring it back up or make variations. The power is expected to come into force in April 2016, just before the next Holyrood election.

Tory leader Ruth Davidson has already said her party would want to reduce income tax in Scotland by 1p in the pound, or possibly more.

It is estimated it will cost between £40 million and £45 million to set up the system for collecting the Scottish rate of income tax, and that running costs will be about £4.2 million a year.