SNP’S £230 STING FOR MARRIED COUPLES
HUNDREDS of thousands of married Scots face losing a £230 tax break in a hidden blow from the SNP Budget. The marriage allowance cuts the bill of basic rate taxpayers if their spouse is out of work or in a low-income job. But the SNP’s decision to force everyone earning more than £24,000 to pay a new 21p in the pound ‘intermediate’ rate means they will no longer be eligible for the allowance.
And those paying a new lower 19 per cent ‘starter’ rate will also be excluded from the tax cut,
because the legislation states it can only be claimed by basic rate taxpayers.
One in three taxpayers will see their pay packets raided as a result of the SNP Budget.
Some Scots will also be hit by an increase in National Insurance bills, while hundreds of thousands of people are at risk of missing out on pension cash.
Tory finance spokesman Murdo Fraser said: ‘This is just another way that the SNP’s Budget will hammer hardworking families. Not only are over a million Scots being hit with tax hikes, but hundreds of thousands more could lose access to the marriage allowance.
‘It is yet more evidence that the SNP simply haven’t thought these tax plans through – and they need to reconsider them.’
It is estimated that hundreds of thousands of Scots are eligible for the marriage allowance, which costs around £18million a year north of the Border. Under the scheme, when one partner earns less than £11,500 they can transfer up to £1,150 of their tax-free personal allowance to their spouse – which can save the couple up to £230 a year.
But it is only available when the higher earner is a basic rate taxpayer.
The SNP’s Budget changed tax rates and means that only those earning £13,850-£24,000 will pay the basic rate. Those earning £24,000-£44,273 will pay a 21p intermediate rate; for earnings between £44,273£150,000 there will be a higher 41p rate and salaries over £150,000 face a 46p top rate. In addition, a ‘starter rate’ of 19p will be paid by those on £11,850-£13,850.
No Scots on the new starter, intermediate, higher or top rates will be eligible for the allowance from April.
It is understood that the Treasury will need to consider introducing new legislation to take account of the changes.
In the rest of the UK, people earning up to £46,350 will be able to receive the marriage allowance from April.
Many Scots will also be hit with a National Insurance increase next year. Contributions are set across the UK and are tied to the UK higher rate for income tax. Currently, taxpayers pay 12 per cent on earnings up to £45,000, with the rate dropping to 2 per cent above that. But the 2 per cent rate will rise to £46,350 from April – meaning everyone earning more than that will have to pay an extra £135.
Hundreds of thousands could also miss out on pension cash. The amount of pension relief that taxpayers receive should rise by up to £204 as a result of the SNP’s higher tax bands. However, it is feared many will miss out because their providers are not aware they are Scottish taxpayers.
In its White Paper before the 2014 referendum, the SNP said the marriage allowance would be scrapped after a Yes vote because it discriminates against unmarried couples.
A Treasury spokesman said: ‘We will carefully consider any implications of recent [tax] changes for the marriage allowance and set out next steps in due course.’
A Scottish Government spokesman said: ‘It is not the intention of this Government that married Scots should lose their eligibility for marriage allowance... we are already working with HMRC to ensure this doesn’t happen.’
CHRONICALLY short of top-tier talent, the SNP has long been desperate to portray Derek Mackay as a rising star, even resorting to a toe-curling stunt where leader Nicola Sturgeon lobbed him cough sweets and called him ‘a safe pair of hands’ at the party conference.
Trouble is, the Finance Secretary keeps dropping the policy ball.
On his watch as transport minister, the Forth Road Bridge shut after the maintenance budget was raided following the abolition of tolls.
Thousands faced the misery of delays and ridiculously extended commutes. More able politicians have been finished by less.
And now Thursday’s Budget, with ‘fair’ and ‘progressive’ taxes that mean so-called winners are 38p a week better off while 757,000 pay more. And all that while the gulf between workers North and South of the Border yawns wider.
Now emerges a bungle over the £230 HMRC marriage allowance.
Mr Mackay’s tinkering with the lower end of the tax bands – splitting them into starter, intermediate and basic – was an underhand bid to disguise the fact he was breaking a manifesto pledge not to alter the basic rate of tax.
But the hapless Finance Secretary has created a situation whereby hundreds of thousands of married Scots face losing the marriage allowance as those on anything other than the basic band become ineligible. Given that he made great play of saving low-income earners a whopping £20 a year, he can hardly now pretend the loss of £230 is trivial.
And Mr Mackay’s competence is also under question over a £2.1billion tax black hole because overall revenue will be lower than predicted. How often have we been here? Bungled predictions about income from the ongoing shambles that is the Land and Buildings Transaction Tax have sent Mr Mackay racing back to the taxpayer for more money before now.
An eleventh-hour scramble seems under way to protect the marriage allowance but the damage is done to Mr Mackay’s shaky reputation. Safe hands? Scots would barely trust him to count the fingers on those hands correctly.