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Recent months have seen significant changes to the UK tax landscape, with some measures having already come into effect, and Scottish tax devolution already fairly advanced.

As the devolutionary drive continues to gather pace, the tax system is set for further landmark changes over the coming months and years.

Scottish income tax changes

6 April 2016 saw the introduction of the Scottish Rate of Income Tax (SRIT), which was initially set at 10% – meaning that for 2016/17, taxpayers who are resident in Scotland have continued to pay the same overall rates of income tax as the rest of the UK.

However, from 6 April 2017, Scotland gains full control over income tax, allowing the Scottish government to set the rates and bands (excluding the personal allowance) on the non-savings, non-dividend income of Scottish taxpayers.

In the draft Scottish Budget, Scottish Finance Secretary Derek Mackay confirmed that for 2017/18 the Scottish government will be exercising these additional powers, by freezing the higher rate income tax threshold at £43,000. This marks a deviation from the UK government’s plan to increase the higher rate threshold to £45,000.

Air Passenger Duty

The Scottish government has also been granted additional powers in other areas, including provision for a tax to replace Air Passenger Duty (APD) in Scotland with effect from 1 April 2018, with a stated commitment to deliver a 50% reduction in APD by the end of this Parliament.

Income tax in Wales

Meanwhile, the Welsh government is set to gain its own new income tax-setting powers in April 2019, allowing it to make cuts or increases of up to 10p within each band of the income tax collected within Wales.

Land Transaction Tax

From April 2018, Wales will introduce its replacement for stamp duty land tax, in the form of the new Land Transaction Tax (LTT). Higher rates of stamp duty on purchases of additional residential property will continue to apply in Wales, as part of the new LTT legislation.

Corporation tax in Northern Ireland

In April 2018, Northern Ireland is set to gain additional control over corporation tax, with the introduction of the Northern Ireland Rate. This new rate of corporation tax will be charged on profits generated in Northern Ireland and the Northern Ireland Executive plans to set the new rate at 12.5%.

Practice Track can help you to keep your clients up-to-date with the latest tax rates and allowances. With this in mind, we have created the UK Tax Rates Pocket Guide, a 16-page colour booklet which covers all of the major tax rates applying in England, Wales, Scotland and Northern Ireland.

To find out more, please click here.

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