Tax Newsletter | December 2019

Merry Christmas from our tax team


Here are some important areas of tax for you to consider and some of the changes that will be coming in 2020…



Scottish Income Tax

In 2018/19 the rates of tax differed in Scotland for the first time since The Scottish Rate of Income Tax (SRIT) came into force from 6 April 2016.  While the tax bands were already different from those for the rest of the UK, 2018/19 was the first year in which the rates were altered.  This means those on the lowest incomes pay slightly less in Scotland while most on higher incomes pay more in Scotland. 


What income does the SRIT affect?

The SRIT only affects non-savings income which includes employment, pensions, self-employment and property income.  All savings and investment income remain taxable at the rates and tax bands set by the UK Government and is expected to remain so for the foreseeable future.


2019/20

In 2019/20 the rates in Scotland are:

Starter rate 19%                                                           £0 – £2049

Basic rate 20%                                                             £2,049 – £12,433

Intermediate rate 21%                                                £12,433 – £30,930

Higher rate 41%                                                           £30,930 – £150,000

Additional rate 46%                                                    £150,000 +


The personal allowance along with the other allowance such as savings and dividends are set by the UK Government and apply to Scottish taxpayers on the same basis as all UK taxpayers. 


2020/21

Due to the December 2019 election and the announcement from Scottish Finance minister Derek Mackay that he will only announce the Scottish budget after the UK budget.  The UK budget is due in the first hundred days from 13 December so could be as late at March 2020 which means for the Scottish budget to be later, the Scottish parliament will then have to pass a budget before the start of the new tax year on 6 April 2020.


How to define a Scottish taxpayer?

If you live full time in Scotland you will be a Scottish taxpayer.  If you split your time between Scotland and elsewhere in the UK you need to look closely at the definition of a Scottish taxpayer.  Contrary to speculation, this is not based on the number of days in Scotland.  It is based on a number of factors in which the number of days can play a part.  The main deciding factor is where your home is.   The home or main residence is determined by where your family is based, where your main ties are such as your doctor, dentist and any other indicators that show a property is your home.  This catches those living in Scotland and working in London.


Tax planning

Where individuals have the ability to choose how they take income, such as those with their own company who can choose between salaries and dividends, there is careful planning that can be done. If an individual has more than one home throughout the UK it is important to consider the position personally to ensure you are taxed on the correct rates. Gift aid & pension contributions still receive relief based on the UK rates at 20%.


What should you do next?

If after reading this you think you may be a Scottish taxpayer or you are a Scottish taxpayer and would like to know more about how this affects you personally, please get in touch with Barbara McQuillan (bam@hlca.co.uk) or Lucy Crow (luc@hlca.co.uk).



Conservative Government Corporation Tax Consequences


The Conservative party winning the election by the largest margin since the 1980s, clarifies the United Kingdom’s corporation tax plans going forward.


Rate of Corporation Tax

The party’s U-turn will see the rate of corporation tax maintained at 19%, instead of the previously indicated decrease to 17%. The party states that this will give the Government an extra c£6bn a year more revenue than it would have with the reduced 17% rate.


Research and Development (R&D) tax credit

The Conservative party have stated that they will increase the R&D tax credit rate from 12% to 13%. This is a relief available to large companies. The definition of a large company depends on three criteria: headcount, turnover and gross assets. If your company employs 500 staff or more and have either turnover of more than €100m or €86m in gross assets them you will fall into the scheme.



Making Tax Digital


Making Tax Digital is already in place for VAT but not yet for income tax.  It was scheduled to come in from April 2020 but is now pushed back to 2021 at the earliest.  While it has been pushed back it is still expected to be implemented in the future.  We have been helping our clients navigate the new digital VAT service and we are currently working with software providers and updating our website to ensure we and our clients are ready when Making Tax Digital arrives for income tax.



Get in touch


To discuss any of the issues highlighted within this newsletter, or any other matter you require our help with, please contact us by using the form below

Alan Davis

Alan is Chairman of Henderson Loggie, he is also Head of Tax for the Firm and leads our award winning VAT team. He covers all four offices providing specialist advice on technical VAT compliance and advisory, training and development.

Having spent 16 years with HM Revenue & Customs carrying out VAT assurance visits for a wide range of businesses – from small retailers to local authorities, Alan has gained considerable experience of HM Revenue & Customs inspections. He can help with planning opportunities for VAT efficiency, and can advise our clients on retrospective reclaim opportunities, securing significant VAT repayments.

Alan can also advise on other indirect taxes e.g. landfill tax, aggregates levy, climate change levy, and also offers in-house technical updates to the legal profession.

In addition to his tax specialism, Alan leads our Education Sector Group, ensuring that that team meets all the needs of the sector – from audit, to advisory and across all the services the firm provides.

Barbara McQuillan

Barbara has worked in taxation and specialised in the owner-managed business sector for over 30 years. During that time she has dealt with a wide range of clients in a variety of sectors ranging from the initial establishment of new businesses, through the growth years and then to retirement or sale. Throughout the life cycle of any business, a great variety of tax challenges arise and Barbara has provided pro-active and practical tax advice at every stage.

Barbara is a member of the firm’s Life Sciences Sector Group and with the team provide a wide range of skills and experience to service an important and substantial sector in the Scottish economy. Barbara is involved in running Corporate and Tax Clinics for one of our major Universities, assisting early-stage companies.

Barbara was for a number of years a Director of MHA Henderson Loggie Financial Planning.

Lucy Crow

Lucy is Chartered Tax Advisor qualified and has worked in tax for over 12 years specialising in personal tax.  She works with a wide range of personal tax clients from small sole traders to high net worth individuals and partnerships. She advises clients on all aspects of their personal tax affairs from the preparations of their tax returns to advice on tax planning and capital gains tax.

Lucy is also an affiliate member of STEP (Society of Trust and Estate Practitioners) and works closely with clients and their families on Inheritance tax planning. This ranges from a simple review to look at the potential inheritance tax through to tax planning and retirement planning as well as Trusts and Estate planning and administration.

She works with many clients in the Agricultural and Rural sector ranging from small farms to large estates. In this area Lucy has experience with all taxation issues that can arise from the day to day income tax on farms and estates to the inheritance tax and succession planning

Avril Craig

Avril Craig is manager of the Payroll Department in Dundee, covering payroll and automatic enrolment processes for our payroll bureau clients, and payroll support for clients who handle their own payroll. She oversees the timely delivery of weekly, fortnightly and monthly payroll and automatic enrolment pension processing, RTI submissions and net salary payments for a large variety of clients ranging from two employees to several hundred.

Having spent the vast majority of her career working in accountancy practice, she has specialised in payroll for the last twelve years, and in more recent times, automatic enrolment pensions.

Avril has experience in a large variety of industries and particular enjoys supporting employers in complying with the requirements of HMRC and The Pension Regulator.