Press Comment: Impacts of changes to Scottish income tax | Old Mutual Wealth
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Press Comment: Impacts of changes to Scottish income tax

14/12/2017

If you are covering the impact of the changes to Scottish income tax revealed in their budget please see below comment. 

Jon Greer, head of retirement policy comments:

Jon Greer“This show of Scottish power, while somewhat inevitable, exacerbates an already hideously complex tax system. It will cause short-term havoc as Scottish tax payers may end up receiving the wrong amount of pension tax relief. Worse still, if clarification on how it impacts pension tax relief is not given swiftly, it may hurt the success of auto-enrolment.

“The introduction of two new tax bands will mean that Scottish residents could be entitled to more or less than the basic rate tax relief on some or all of their personal pension contribution. However, it’s uncertain how they will either be charged or will be able to claim this relief. This ultimately rests with HMRC.

“In the worst case scenario those who fall in the 19% tax band, who are the most financially vulnerable, could end up receiving a letter from the tax man demanding more money because they’ve received too much tax relief. The prospect of such an unexpected demand could lead individuals to view their pension contribution in a negative light and this is the last thing that a Government would wish given pension savings rates are so low. We hope that they consider the practicalities of this change carefully.

“Currently, higher rate tax payers have to complete a self-assessment to claim their extra relief. However, this will not work for the new intermediate 21% tax band payer. HMRC will need to introduce a simple process and they will need to do so quickly.  

“With Brexit being all-consuming, it is unlikely the Chancellor has much time to spend on shifts in Scottish income tax, but the Shadow Chancellor may be more interested. The 2017 Labour Manifesto suggested bringing the starting point of additional rate down to £80,000  and adding another rate at the point that the personal allowance was phased out (£123,000 in 2017/18).”

“The move by the Scottish also sets a path that Wales could follow meaning the minutiae of the tax system will become more intricate.”

For more information contact

Kathleen GallagherOld Mutual Wealth023 8072 629307990 004932kathleen.gallagher@omwealth.com

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £116.5 billion in customer investments (as at 30 June 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• Private Client Advisers to Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

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