Income Tax: Scotland

HM Treasury written question – answered on 16th December 2014.

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Photo of Margaret Curran Margaret Curran Shadow Secretary of State for Scotland

To ask Mr Chancellor of the Exchequer, how adjustments to the Scottish block grant will be calculated following implementation of the Scottish rate of income tax.

Photo of Danny Alexander Danny Alexander The Chief Secretary to the Treasury

The Government has agreed a block grant adjustment mechanism through the operation of the Barnett formula with the Scottish Government in relation to the Scottish rate of income tax.

During two or three transitional years, the deduction will reflect the tax generated by a Scottish rate of 10p. Following this transitional period, the first year deduction will again reflect the tax generated by a Scottish rate of 10p, and then in subsequent years this deduction will be indexed against growth in the UK non-savings non-dividend income tax base.

The Scottish Government’s overall funding will therefore be partly determined by the relative growth in the Scottish and UK non-savings non-dividend income tax base.

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