Finance Act 2014

PART 1 Amendments of ITA 2007

1 ITA 2007 is amended as follows.

2 In section 6 (the basic rate, higher rate and additional rate)—

(a) omit subsections (2A) to (2C), and

(b) in subsection (3), after “see—” insert—

“(za) section 6A (Scottish basic, higher and additional rates),”.

3 After section 6 insert—

“6A The Scottish basic, higher and additional rates

(1) The Scottish basic rate, the Scottish higher rate and the Scottish additional rate for a tax year are calculated as follows.

• Step 1

  Take the basic rate, higher rate or additional rate.

• Step 2

  Deduct 10 percentage points.

• Step 3

  Add the Scottish rate (if any) set by the Scottish Parliament for that year.

(2) For provision about the setting of the Scottish rate, see Chapter 2 of Part 4A of the Scotland Act 1998.”

4 In section 10 (income charged at the basic, higher and additional rates: individuals)—

(a) omit subsections (3B) and (3C), and

(b) in subsection (4), at the appropriate place, insert—

“section 11A (income charged at the Scottish basic, higher and additional rates),”.

5 After section 11 insert—

“11A Income charged at the Scottish basic, higher and additional rates

(1) Income tax is charged at the Scottish basic rate on the income of a Scottish taxpayer which—

(a) is non-savings income, and

(b) would otherwise be charged at the basic rate.

(2) Income tax is charged at the Scottish higher rate on the income of a Scottish taxpayer which—

(a) is non-savings income, and

(b) would otherwise be charged at the higher rate.

(3) Income tax is charged at the Scottish additional rate on the income of a Scottish taxpayer which—

(a) is non-savings income, and

(b) would otherwise be charged at the additional rate.

(4) For the purposes of this section, “non-savings income” means income which is not savings income.

(5) This section is subject to—

• section 13 (income charged at the dividend ordinary, upper and additional rates: individuals), and

• any provisions of the Income Tax Acts (apart from section 10) which provide for income of an individual to be charged at different rates of income tax in some circumstances.

(6) Section 16 has effect for determining the extent to which the non-savings income of a Scottish taxpayer would otherwise be charged at the basic, higher or additional rate.”

6 In section 13 (income charged at the dividend ordinary, upper and additional rates)—

(a) in subsection (1)(b), after “the basic rate,” insert “or the Scottish basic rate,”,

(b) in subsection (2)(b), after “the higher rate,” insert “or the Scottish higher rate,”,

(c) in subsection (2A)(b), after “the additional rate,” insert “or the Scottish additional rate,”,

(d) in subsection (3), after “section 10” insert “or 11A”, and

(e) in subsection (4), after “the basic, higher or additional rate” insert “or the Scottish basic, higher or additional rate”.

7 In section 16 (savings and dividend income to be treated as highest part of total income), in subsection (1), for paragraph (za) substitute—

“(za) the rate at which income tax would be charged on the non-savings income of a Scottish taxpayer apart from section 11A,”.

8 In section 809H (charge on nominated income of long-term UK resident), for subsection (3A) substitute—

“(3A) If the individual is a Scottish taxpayer for the relevant tax year, the individual is to be treated for the purpose of calculating income tax charged by virtue of subsection (2) as if the individual were not a Scottish taxpayer for that year.”

9 In section 828B (conditions to be met for exemption where individual resident but not domiciled in the UK), in subsection (5), after “the basic rate” insert “, the Scottish basic rate”.

10 In section 989 (definitions for the purposes of the Income Tax Acts)—

(a) in the definitions of “additional rate”, “basic rate” and “higher rate”, omit “or (2B)”, and

(b) at the appropriate place, insert—

• ““Scottish additional rate” means the rate of income tax of that name calculated in accordance with section 6A,”,

• ““Scottish basic rate” means the rate of income tax of that name calculated in accordance with section 6A,”,

• ““Scottish higher rate” means the rate of income tax of that name calculated in accordance with section 6A,”,

• ““Scottish taxpayer” has the same meaning as in Chapter 2 of Part 4A of the Scotland Act 1998”.

11 In Schedule 4 (index of defined expressions), at the appropriate place, insert—

“Scottish additional rate

section 6A (as applied by section 989)””

“Scottish basic rate

section 6A (as applied by section 989)”

“Scottish higher rate

section 6A (as applied by section 989)”

“Scottish taxpayer

section 989”

12 The amendments made by this Part have effect in relation to the tax year appointed by the Treasury under section 25(5) of the Scotland Act 2012 and subsequent tax years.