CIOT's Scottish response to the UK Budget

On National Insurance changes:

“Increasing employer national insurance and lowering the threshold that it starts to be paid will increase the costs to affected businesses of taking on staff.

“This could have an added sting in the tail for Scottish based businesses, some of whom have been reportedly offering job seekers higher salaries to cover the cost of higher Scottish income tax rates1.

“And it increases the gap between the taxes the government collects from employed and self-employed taxpayers.

“The higher employers’ national insurance goes, the greater the chances employers will seek alternative arrangements to taking people on as employees, such as outsourcing services or reducing headcount.

“We are concerned this could lead to an increase in ‘false self-employment’, without necessarily appreciating the tax rules which apply and have been abused in the past”.

On the tax-free personal allowance being frozen until 2028:

“While the personal allowance remains frozen until 2028, any future changes will eat into the amount of income that the Scottish Government can tax. This could mean adjustments to Scottish income tax bands in the future”.

On the prospect of further tax changes in the December Scottish Budget:

“The Chancellor warned this would be a budget of tough choices, and today’s tax announcements demonstrate this. But they do not paint the full picture for Scotland as there may be more tough choices to come in December’s Scottish Budget”.

ENDS

Notes for Editors

 For example, see Recruiters offer ‘Scotland weighting’ to offset higher taxes (The Times, 31 March 2024)