Treasury ‘can’t promise help if Scottish budget changes hit tax allowances’
The Chief Secretary to the Treasury has said she “can’t make any promises” on whether Westminster will always be able to help if changes made by the Scottish Government impact on people’s tax allowances.
While Liz Truss told MSPs “the Treasury always likes to be helpful”, she could not provide a guarantee this would always be the case as she said it would have to consider the “budgetary implications”.
It comes after a deal was agreed between the Scottish and UK governments to prevent Scots losing out on the married couples allowance.
The allowance lets married couples, and those in civil partnerships, to transfer up to 10% of the personal tax allowance – the money they can earn before they start paying income tax – to their partner, provided they are a basic rate tax payer.
The scheme can save couples about £230 a year, but the introduction of new starter and intermediate tax bands in Scotland in the 2018-19 budget reduced the number of basic rate tax payers.
The changes were made after Holyrood was given responsibility for income tax rates and bands as part of the wave of new powers devolved to Edinburgh in the wake of the 2014 independence referendum.
The Scottish Government and the Treasury was able to reach an agreement earlier this year to ensure no couples north of the border lost access to the allowance.
Ms Truss, who was giving evidence to MSPs on Holyrood’s Finance and Constitution Committee, was asked if this would happen again in future years.
Tory MSP Murdo Fraser asked: “If the Scottish Government in a future budget was going to make similar changes that might affect allowances, would the Treasury be similarly minded to be helpful in terms of making further adjustments?”
She replied: “The Treasury always likes to be helpful, but we can’t make any promises, Murdo, and we’ve got to look at the overall budgetary implications of that.”