New Scottish Tax Rates | Part 2

In part 2 of our look at the new Scottish tax rates, we turn to tax reliefs and how they affect you!

Following on from our last Article ‘New Scottish Tax Rates’ we now look at what this change means to the 5 key tax reliefs which Scottish Salon Owners, Barbershop Owners and Stylists (whether employed or Chair Renters) will be using to save tax.

These tax reliefs are all based on UK tax law but now that Scotland has started to move away from the rest of the UK, the UK Government has had to clarify how to apply them in Scotland. 

We take each in turn: 

1. Marriage Allowance

Marriage Allowance allows taxpayers to transfer 10% of their tax-free Personal Allowance to their spouse or civil partner, reducing their tax bill by up to £238 in 2018/19. The UK government will ensure that all those claiming Marriage Allowance in Scotland can continue to do so at the current rate (20%); effectively ignoring the lower 19% tax band in Scotland.

2. Gift Aid

Gift Aid allows charities to claim back 25p for every £1 donated. The UK government will make changes to ensure that Scottish taxpayers can benefit from the right rate of tax relief on Gift Aid, which will continue to be paid to charities at the basic rate, with Scottish taxpayers able to claim the correct amount of additional relief on top of this.

3. Pensions relief at source

For 2018/19, Scottish taxpayers who receive relief on their contributions at source will continue to receive relief in their pension pot at 20%, with no adjustment for those taxed at a rate of less than 20%, and scope for those taxed at a rate higher than 20% to claim additional relief.

4. Social security pension lump sum

The UK government will make changes so that Scottish taxpayers who receive a social security pension lump sum will be taxed, where appropriate, at the new Scottish starter rate.

5. Finance cost relief

This will continue to apply at 20%, the same rate applicable to landlords across the UK.

Salonfrog’s thoughts

All good news for Scottish tax payers as the UK Government has ensured that wherever you live in the UK, you’ll receive the same level of allowance in these 5 cases.

Of course, it’s down to the tax payer to know this and make sure they claim the correct amount when completing their tax returns, which Salonfrog does for all its Clients as part of its Core Service.
Always happy to answer any questions you may have on this or any other area of tax!