Scotland Act receives royal assent

The Scotland Act received royal assent on 23 March 2016. The Scottish rate of income tax starts in April 2016 and full devolution of income tax rates and thresholds for non-savings and non-dividend income will commence in April 2017. Air passenger duty will be devolved in April 2018. Assignment of VAT revenues will be implemented in 2019/20.

The Institute for Fiscal Studies and the University of Stirling have published a joint report on the fiscal framework agreement reached by the UK and Scottish Governments in February for devolution of new powers under the Act. This report highlights that while the block grant formula over the first five years satisfies the Smith Commission’s ‘no detriment’ principle it does not satisfy the ‘taxpayer fairness’ principle. A cut in income tax rates or threshold increase could see the Scottish government’s budget fall and vice versa. Part of any growth...