The fall-out from the Scottish referendum no vote will continue to affect businesses and investors on both sides of the border.
The ramifications of the no vote are not as simple as burying the call for independence.
The Conservatives, labour and the Lib-Dems have all put forward proposals to devolve more power to Edinburgh – and this includes measures to raise tax.
Just how this will be implemented and how much impact this will have on businesses, investors and workers is still to be seen.
The worst case scenario is a two-speed tax system working on different sides of the border.
Tax concerns
This would introduce concerns for taxpayers and businesses:
- Cross-border businesses might pay different corporation and VAT taxes north and south of the border
- Tax changes could see an exodus of workers from one side of the border to the other, leading to a corresponding rise or fall in property prices
- Businesses would need to tool up with accounting and tax software that would meet differing tax rules on either side of the border
- If devolution powers are voted through that deny Scottish MPs the vote on English laws, then cross border workers could lose their political voice to influence political policies that affect their tax, working conditions and salaries
David Glen, head of tax in Scotland at accountancy firm PwC, said: “People should not underestimate how much change will come as a result of the vote. Yes or no, the vote is a turning point.
“Scotland and England will have different income tax rates and different taxes on property.
Everyone’s affected
“Just about everyone living, working or doing business is Scotland will be affected to some extent.”
He explained those most affect include the self-employed, who may not have the resources or skills to run a cross-border business and homeowners.
“Homeowners will find no stamp duty in Scotland, but a similar tax based on more progressive banding of values,” said Glen. “This could be the opportunity for the rest of the UK to look at how people and property are taxed to update an aging and creaking tax system for the future.”
Meanwhile, how this will affect investments remains in limbo until politicians release more details about the new Scotland Act.
The financial world might still see the head offices of banks and financial services companies moving south to a ‘safe haven’ base in England where tax policies are more certain.
