Westminster bid to prevent Scots losing tax allowance

A DEAL is to be struck to prevent married Scots from losing a £260 tax break.

Under the Scottish Government’s Budget, no one earning more than £24,000 a year would be entitled to continue to claim marriage allowance from April.

But the UK Government is working on last-ditch changes which will allow anyone earning up to £43,430 to continue to claim the allowance if their husband, wife or civil partner does not work or earns a low wage.

Officials from the Treasury, Her Majesty’s Revenue and Customs and the Scottish Government have been working together since Finance Secretary Derek Mackay announced his tax plans in December.

An HMRC spokesman said: ‘The UK Government is working with the Scottish Government to ensure that those who can currently claim marriage allowance will be able to continue doing so.’

Under the marriage allowance, when one partner earns less than £11,500 a year they are able to transfer up to £1,150 of their tax-free personal allowance to their spouse – which can currently save the couple up to £230 a year, with a potential saving of £260 from April.

The Government’s Budget changed tax rates so only those earning between £13,850 and £24,000 will still pay the basic rate of 20 per cent and be able to claim the allowance. It is understood that changes will be introduced to allow those on the new 21p ‘intermediate’ rate – which is charged on earnings between £24,001 and £43,430 – to retain eligibility.

According to the Government, there are almost 900,000 taxpayers in Scotland within this band.

Scottish Conservative MP Luke Graham said: ‘Derek Mackay’s lack of consideration about how the changes to marriage allowance will affect hard-working people makes you question how competently the SNP are using their tax powers.

‘It’s a huge embarrassment for the Nationalists that the UK Government should have to step in to sort out their mess.’

David Cameron introduced the marriage allowance in 2015 after making a personal pledge before he entered Downing Street.

As a result of the Budget, which passed stage one at Holyrood last week, 1.1million will pay higher rates of income tax than if they lived in other parts of the UK.

During questioning by MSPs at the Scottish parliament’s finance committee last month, Mr Mackay said the threat to marriage allowance was an ‘unintended consequence’ of his tax policies.

Yesterday a Scottish Government spokesman said: ‘The UK Government has confirmed that Scottish taxpayers who fall into the starter, basic and intermediate rates will be eligible for marriage allowance on the same basis as elsewhere in the UK.’

‘Step in to sort out their mess’