The Scottish Rates of Income Tax (Consequential Amendments) Order 2021

Made24th February 2021

Coming into force25th February 2021

This Order is made by the Treasury in exercise of the powers conferred by section 80G(1A) and (4) of the Scotland Act 19981.

A draft of this Order was laid before and approved by the House of Commons in accordance with paragraphs 1 and 2 of Schedule 7 to the Scotland Act 19982.

Citation, commencement and effect1

1

This Order may be cited as the Scottish Rates of Income Tax (Consequential Amendments) Order 2021 and comes into force on the day after the day on which it is made.

2

The amendments made by this Order have effect in relation to the tax year commencing on 6th April 2020 and subsequent tax years.

Amendment to the Finance (No.2) Act 20052

In section 7(5A)(c) of the Finance (No. 2) Act 20053 (charge to income tax on lump sum) for the words after “that tax year that” substitute “would be applicable to an amount of income that is equal to P’s Step 3 income4 for that year if such amount were wholly chargeable to income tax at Scottish rates”.

James MorrisDavid RutleyTwo of the Lords Commissioners of Her Majesty’s Treasury24th February 2021

EXPLANATORY NOTE

(This note is not part of the Order)

This Order amends section 7(5A)(c) of the Finance (No. 2) Act 2005 (c. 22) so that Scottish taxpayers who receive a social security pension lump sum are taxed at the highest Scottish rate that would be applicable for a tax year if income tax were charged at Scottish rates on their income including savings and dividend income.

The Order has effect from the start of the tax year in which it is made in accordance with section 80G(4) of the Scotland Act 1998.

A Tax Information and Impact Note has not been prepared for this Instrument as it contains no substantive changes to tax policy.