“The burden of payment of apprentices is being shifted from the public purse to individual companies, and as a consequence, the relevant budget in the UK will be reduced and there will be a consequential effect on the Scottish budget,” – Moira Kelly of the Chartered Institute of Taxation’s Scottish Technical Committee
Scottish tax advisers have warned that the chancellor’s proposal to introduce a new apprenticeship levy will have a consequential effect on the Scottish budget and describe the Treasury as “wrong-headed” to regard the move as a revenue raiser.
While the Chartered Institute of Taxation’s (CIOT) Scottish Technical Committee has welcomed the tax credit cuts reversal, it has also expressed caution over the apprenticeship levy.
Moira Kelly, Scottish Technical Committee chair, explained: “The Chancellor announced a raft of measures which will have an effect on Scottish taxpayers. He had previously announced that the working tax credit threshold would be reduced from £6,420 down to £3,850 from April 2016 and the child tax credit threshold reduced from £16,105 to £12,125.
“However, it’s not all good news; for example the income disregard is still to be halved to £2,500 (from £5,000).
“The rationale for a reversal in policy on tax credits was due to ‘improved public finances’.
“George Osborne also announced details of a UK-wide apprenticeship levy to help fund employer apprenticeship schemes. The levy is due to be introduced in April 2017 at a rate of 0.5 per cent of an employer’s pay bill, delivering some three million apprenticeships starting by 2020. Employers will receive an allowance of £15,000 to offset against their levy payment, which will only be paid on bills in excess of £3m. The Government believes the levy will raise £3bn by 2019/20.
“The burden of payment of apprentices is being shifted from the public purse to individual companies, and as a consequence, the relevant budget in the UK will be reduced and there will be a consequential effect on the Scottish budget.
“It is important to remember that it will be mainly medium and larger companies that will pay the levy; you would have to be a fairly significant business to have a wage bill of £3 million. In any case, it would be wrong-headed for the Treasury to regard the measure as a revenue-raiser as the money raised ought to be distributed back to those businesses which have invested significant resources in training apprentices.
“In respect of the SDLT announcement, due to apply from April 2016, this will not affect properties in Scotland, as they are only subject to LBTT. The extra 3% will only be added to SDLT. So, we will need to keep a keen eye on what the interactions (if any) will be for those who may own multiple properties in Scotland, England or Wales.”