UK budget ‚ the view from Scotland
Even before Philip Hammond got to his feet at 12.30pm last Wednesday, it had long been predicted that his first budget as Chancellor of the Exchequer would be markedly different in both tone and content from those of his predecessor, George Osborne. So it proved.
This was a budget statement light on policy announcements, one focused almost entirely on an analysis of the performance of the British economy and its prospects for the future.
Don‚ t just take my word for it. Let the numbers speak from themselves.
An analysis by CIOT of each Budget ‚ Red Book‚ published since the Conservatives first came to power showed this year‚ s to be the shortest in length (64 pages), new tax announcements (14) and overall tax and spending measures (28).
The need to ‚ do less and do it better‚ was central to the ‚ Better Budgets‚ report published in January by the CIOT, the Institute for Government and the Institute for Fiscal Studies.
The devolution of tax raising powers from Westminster to the Scottish Parliament means that a number of decisions announced by the Chancellor will either not apply directly to Scotland (such as the package of measures to ease Business Rates burdens) or have a more limited impact (such as increasing the income tax threshold to £45,000, which applies only to savings and dividend income of Scottish taxpayers.
But they will have an indirect impact on Scotland as a result of the extra £350 million allocated to the Scottish Government through the Barnett Formula.
What the Scottish Government chooses to do with this money will be a matter for them to decide.
That said, a considerable number of the Chancellor‚ s tax announcements will continue to have direct relevance to Scotland.
These include the high profile (and politically controversial) decision to increase Class 4 National Insurance Contributions (NICs) for the self-employed, changes to the tax free dividend allowance and exemptions for small unincorporated businesses from the Making Tax Digital (MTD) programme for a year.
A review of the fiscal regime for the North Sea oil and gas industry has been promised and is expected to report in time for the Autumn Budget.
The interactions between devolved and reserved taxes are also beginning to become clearer as a result of the divergences in the rate at which Scottish taxpayers start paying the higher rate of income tax.
The Scottish Government‚ s decision to freeze the higher rate threshold means that, from April, Scots will pay a marginal tax and National Insurance (NI) rate of 52p in the pound (40p income tax, 12p NI) on the portion of their earnings between £43,000 and £45,000, compared with 32p (20p income tax, 12p NI) for their English counterparts, who will see the basic 20p rate of tax apply to earnings up to £45,000. As a result any Scottish resident earning £45,000 or more will pay £400 more in tax than they would in England.
All of which is likely to make for interesting debate in the weeks and months to come.