The Scotsman

SNP warned devolving NI may be ‘complicate­d and costly’

Tax experts have warned that the SNP’S manifesto pledge to devolve National Insurance (NI) to Holyrood could lead to a “more complicate­d and costly” system.

The SNP’S manifesto for the general election, published earlier this week, stated that SNP MPS “will demand the full devolution of tax powers”, which the party claims will “enable us to create a fairer system that protects public services and invests in our economy”.

The document adds: “With the devolution of NI, we could ensure rates and thresholds fit our progressiv­e income tax rates.

“With the full devolution of tax powers, we would crack down on tax avoidance and evasion and improve the transparen­cy of tax paid by internatio­nal companies to ensure that they make a proportion­ate contributi­on to tax revenues.”

Holyrood already sets Scotland’s income tax bands.

But experts at the Chartered Institute of Taxation (CIOT), have warned that different rates of NI for different parts of the UK could cause complicati­ons and added costs.

Speaking to The Scotsman, Chris Thorpe, technical officer for the CIOT, said: “NI devolution would give the Scottish Government the power to make changes to the way it operates in Scotland, but it may not be straightfo­rward to deliver.

“Devolution would mean that ministers could choose to align NI with Scottish income tax rates and bands. “This could address the anomaly that sees Scots with earnings between the Scottish and UK higher rate tax thresholds pay a marginal rate of tax of 50 per cent on that slice of their income, compared with 28 per cent in the rest of the UK.”

He added: “However, devolution could also make things more complicate­d and costly.

“If different rules applied to different parts of the UK, it could become more challengin­g for businesses based across the country and employees moving between jobs in different parts of the UK.

“While it is easy to see the reasoning that a Scottishba­sed employee should be liable for Scottish National Insurance, it is harder to justify in the case of employer contributi­ons, such as where a company is located outside Scotland with Scottish remote workers.

“There is also the question of what would happen to the Uk-wide NI fund, which pools the money raised from NI across the UK to help pay for some social security benefits and the state pension.”

SNP candidate for Inverness, Skye and West Rossshire, Drew Hendry, said: “Scotland already has the most progressiv­e income tax system in the UK. By protecting those who earn less, and asking those who earn the most to pay a little bit more, we have also been able to invest in our public services in the face of Westminste­r austerity cuts.

“Only this week, the Institute for Fiscal Studies recognised that ‘devolving income tax on savings and dividends is a sensible idea, as is devolving NI contributi­ons’.

“We know that neither the Labour party or the Tories will protect our public services from Westminste­r cuts, which is why it’s essential that NI is devolved to ensure rates and thresholds fit our progressiv­e income tax rates.”

50% Amount higher earners in Scotland pay in tax