How would tax rates be affected by Scottish independence?

683720921The story that has been on everybody’s lips has been Scottish independence – and whether there’s a Yes or a No vote, there could be tax changes afoot.

If Scotland decides to go it alone, Holyrood would be able to decide its own income tax rates, not to mention VAT and corporation tax. Lowering the latter could bring a rush of businesses into major cities such as Edinburgh and Glasgow.

That said, should voters want to remain in the union, they’ll get plenty of autonomy anyway. Major political leaders – including David Cameron and Ed Miliband – have promised more powers to the Scottish government in the event of a No vote. This is known as ‘devo-max’.

Some of the powers that could be transferred from Westminster include stamp duty, land tax, and a brand-new rate of income tax that’s exclusive to Scotland.

However, it’s likely that the decision to set the personal income tax allowance would remain in the UK government’s hands under devolution, so Scotland wouldn’t be completely free.

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