Businesses to face higher admin costs

THE SNP’s decision to overhaul the income tax system will come at a cost to businesses and public funds, economic forecasters have warned.

Ministers announced in last month’s Budget an overhaul of rates and bands which will see everyone earning more than £26,000 a year pay more than they would if they lived south of the Border.

But robert Chote, chairman of the Office for Budget responsibility, the Treasury’s main economic forecaster, yesterday said the decision to introduce new bands will add to costs at both Her Majesty’s revenue and Customs and also businesses.

Under the SNP’s plans, a new 21p ‘intermediate’ rate of income tax will be introduced for earnings between £24,000 a year and £44,273, as well as a 19p ‘starter’ rate for earnings between £11,850 and £13,850.

Asked about the consequences of the move during a meeting of the Scottish parliament’s finance committee yesterday, Mr Chote said: ‘Clearly, the creation of new bands is something that is likely to pose some kind of administrative cost both in terms of HMRC and of the businesses who have to adapt their payroll in order to do this.’

During yesterday’s meeting, Finance Secretary Derek Mackay claimed his tax plans would attract people to Scotland.

He said: ‘Despite what some people would argue, Scotland is now – in terms of personal taxation for a majority of taxpayers – the lowest taxed part of the UK. I think it offers the best deal, so that should attract people to Scotland.’