Tax experts have warned that Conservative plans to devolve full income tax powers to Scottish Parliament could see hundreds of thousands of Britons having to complete self-assessment tax returns every year, The Telegraph has reported.
According to Patrick Stevens, tax policy director at the Chartered Institute of Taxation, the proposals would mean English people could face different tax rates on any savings or investments they have in Scotland, and the only way to make the money back would be to fill out a self-assessment tax return at the end of each financial year.
Not only would this cause additional admin for UK households and put further strain on HMRC, but many fear that having two separate tax regimes would be difficult for those living on one side of the border, who may have investments on the other.
After expressing his concerns about the tax implications before a Commons committee, Stevens further explained his thoughts to The Telegraph:
“If in England the basic rate [of tax] has gone down to 17% and yet your RBS rate is still deducted at 20% then you will want to get your 3p in the pound back again,” he said. “The only logical way of getting all of that sorted is for you to fill in a self-assessment tax return and get the money back.”
The majority of those affected are likely to be Scots, Stevens advised, whilst Jesse Norman – a Tory MP on the Treasury committee – agreed that the decision could prove “quite onerous”, with more people being “pushed” into filling out returns.
The final draft proposals for devolution legislation are set to be announced in January 2015.