Scotland Bill (HL Bill 79)

(b) make any other modifications of the provisions relating to

devolved taxes which She considers necessary or expedient.

(2) An Order in Council under this section may also make such

modifications of—

(a) 5any enactment or prerogative instrument (including any

enactment comprised in or made under this Act), or

(b) any other instrument or document,

as Her Majesty considers necessary or expedient in connection with

other provision made by the Order.”

(3) 10In section 93 (agency arrangements)—

(a) after subsection (2) insert—

“(2A) The collection and management of a devolved tax is a specified

function of the Scottish Ministers.”;

(b) in subsection (3), in the definition of “specified”, after “specified” insert

15“(subject to subsection (2A))”.

(4) In section 127 (index of defined expressions), at the appropriate place insert—

(5) In Part 2 of Schedule 5 to that Act, in Section A1 (specific reservations: fiscal,

economic and monetary policy), for “Exception” substitute “Exceptions” and

20after that heading insert—

“Devolved taxes, including their collection and management.”

(6) In Schedule 7 (procedure for subordinate legislation), in paragraph 1, at the

appropriate place insert—

29 25Amendments relating to the Commissioners for Revenue and Customs

(1) The Commissioners for Revenue and Customs Act 2005 is amended as follows.

(2) Section 18 (confidentiality) is amended as follows.

(3) In subsection (2)—

(a) omit “or” at the end of paragraph (g), and

(b) 30after paragraph (h) insert “, or

(i) which is made to the Scottish Ministers in connection

with the collection and management of a devolved tax

within the meaning of the Scotland Act 1998.”

(4) After subsection (2) insert—

“(2A) 35Information disclosed in reliance on subsection (2)(i) may not be further

disclosed without the consent of the Commissioners (which may be

general or specific).”

(5) In section 19 (wrongful disclosure) in subsections (1) and (8) after “18(1)” insert

“or (2A)”.

(6) In section 51 (interpretation) after subsection (2) insert—

“(2A) But a reference to the functions of the Commissioners or of officers of

5Revenue and Customs does not include a function which—

(a) is conferred on them by or by virtue of an Act of the Scottish

Parliament or an instrument made under such an Act, and

(b) relates to a devolved tax within the meaning of the Scotland Act

1998.”

(7) 10In section 1(1) of the Customs and Excise Management Act 1979

(interpretation), at the end of the definition of “assigned matter” insert “, except

that it does not include any matter relating to a devolved tax within the

meaning of the Scotland Act 1998;”.

Scottish rate of income tax

30 15Scottish rate of income tax

(1) The 1998 Act is amended as follows.

(2) Part 4 (power to vary income tax rate) is omitted.

(3) In Part 4A (as inserted by section 28), after Chapter 1 insert—

“CHAPTER 2 Income Tax

80C 20Power to set Scottish rate for Scottish taxpayers

(1) The Scottish Parliament may by resolution (a “Scottish rate resolution”)

set the Scottish rate for the purpose of calculating the rates of income

tax to be paid by Scottish taxpayers.

(2) Section 6(2B) of the Income Tax Act 2007 provides for the calculation of

25those rates.

(3) A Scottish rate resolution applies—

(a) for only one tax year, and

(b) for the whole of that year.

(4) A Scottish rate resolution may specify only one rate.

(5) 30The Scottish rate must be a whole number or half a whole number.

(6) A Scottish rate resolution—

(a) must specify the tax year for which it applies,

(b) must be made before the start of that tax year, and

(c) must not be made more than 12 months before the start of that

35year.

(7) If a Scottish rate resolution is cancelled before the start of the tax year

for which it is to apply—

(a) the Income Tax Acts have effect for that year as if the resolution

had never been passed, and

(b) the resolution may be replaced by another Scottish rate

resolution.

(8) 5Standing orders must provide that only a member of the Scottish

Government may move a motion for a Scottish rate resolution.

80D Scottish taxpayers

(1) In any tax year, a Scottish taxpayer is an individual (T)—

(a) who is resident in the UK for income tax purposes, and

(b) 10who, for that year, meets condition A, B or C.

(2) T meets condition A if T has a close connection with Scotland (see

section 80E).

(3) T meets condition B if—

(a) T does not have a close connection with any part of the UK other

15than Scotland (see section 80E), and

(b) T spends more days of that year in Scotland than in any other

part of the UK (see section 80F).

(4) T meets condition C if, for the whole or any part of the year, T is—

(a) a member of Parliament for a constituency in Scotland,

(b) 20a member of the European Parliament for Scotland, or

(c) a member of the Scottish Parliament.

(5) In this Chapter “the UK” means the United Kingdom.

80E Close connection with Scotland or another part of the UK

(1) To find whether, for any year, T has a close connection with any part of

25the UK see—

(a) subsection (2) (where T has only one place of residence in the

UK), or

(b) subsection (3) (where T has 2 or more places of residence in the

UK).

(2) 30T has a close connection with a part of the UK if in that year—

(a) T has only one place of residence in the UK,

(b) that place of residence is in that part of the UK, and

(c) for at least part of the year, T lives at that place.

(3) T has a close connection with a part of the UK if in that year—

(a) 35T has 2 or more places of residence in the UK,

(b) for at least part of the year, T’s main place of residence in the UK

is in that part of the UK,

(c) the times in the year when T’s main place of residence is in that

part of the UK comprise (in aggregate) at least as much of the

40year as the times when T’s main place of residence is in any one

other part of the UK, and

(d) for at least part of the year, T lives at a place of residence in that

part of the UK.

(4) In this section “place” includes a place on board a vessel or other means

of transport.

80F Days spent in Scotland or another part of the UK

(1) T spends more days of a year in Scotland than in any other part of the

5UK if (and only if)—

(a) the number of days in the year on which T is in Scotland at the

end of the day

equals or exceeds

(b) the number of days in the year on which T is in any other part

10of the UK at the end of the day.

(2) But T is not to be treated as being in the UK at the end of a day if—

(a) on that day T arrives in the UK as a passenger,

(b) T departs from the UK on the next day, and

(c) during the time between arrival and departure T does not

15engage in activities which are to a substantial extent unrelated

to T’s passage through the UK.

80G Supplemental powers to modify enactments

(1) The Treasury may by order provide that subsections (2A) to (2C) of

section 6 of the Income Tax Act 2007 are to be disapplied, or that their

20effect is to be modified, in relation to any enactment.

(2) The Treasury may by order make such modifications of any enactment

as they consider necessary or expedient in consequence of or in

connection with—

(a) the power of the Parliament to set a rate under section 80C;

(b) 25the making of a Scottish rate resolution;

(c) an order under subsection (1).

(3) An order under subsection (2) may, in particular, provide that a

Scottish rate resolution does not require any change in the amounts

repayable or deductible under PAYE regulations between—

(a) 30the beginning of the tax year for which the resolution has effect,

and

(b) such date (falling after the date of the resolution) as may be

specified in the order.

(4) An order under this section may, to the extent that the Treasury

35consider it to be appropriate, take effect retrospectively from the

beginning of the tax year in which the order is made.

80H Reimbursement of expenses

The Scottish Ministers may reimburse any Minister of the Crown or

government department for administrative expenses incurred by

40virtue of this Chapter at any time after the passing of the Scotland Act

2011 by the Minister or department.”

(4) The repeal by subsection (2) of Part 4 of the 1998 Act has effect so that a tax-

varying resolution may not be passed so as to relate to any tax year following

such tax year as is appointed by the Treasury by order under this subsection

45(as the last year for which that Part is to have effect).

(5) A Scottish rate resolution made under the provisions inserted by subsection (3)

may not apply for a tax year preceding such tax year as is appointed by the

Treasury by order under this subsection (as the first year for which those

provisions are to have effect).

(6) 5The tax year appointed under subsection (4) must precede the tax year

appointed under subsection (5).

(7) Schedule 3 (which contains other amendments relating to the power to set a

Scottish rate of income tax) has effect.

31 Income tax for Scottish taxpayers

(1) 10The Income Tax Act 2007 is amended as follows.

(2) In section 6 (the rates of income tax) after subsection (2) insert—

“(2A) Subsection (2) does not apply to the non-savings income of a Scottish

taxpayer.

(2B) The basic rate, higher rate and additional rate for a tax year on the non-

15savings income of a Scottish taxpayer is to be found as follows.

Step 1

Take the basic rate, higher rate or additional rate determined as such

under subsection (2).

Step 2

20Deduct 10 percentage points.

Step 3

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

year.

(2C) Chapter 2 of Part 4A of the Scotland Act 1998 makes provision about

25the meaning of “Scottish taxpayer” and the setting of the Scottish rate.”

(3) In section 10 (income charged at particular rates: individuals) after subsection

(3A) insert—

“(3B) If the individual is a Scottish taxpayer, the basic rate, higher rate and

additional rate are—

(a) 30on so much of the individual’s income as is savings income, the

rates determined as such under section 6(2);

(b) on so much of the individual’s income as is not savings income,

the rates determined as such under section 6(2B).

(3C) Section 16 has effect for determining which part of a Scottish taxpayer’s

35income consists of savings income.”

(4) In section 16 (savings and dividend income to be treated as highest part), in

subsection (1) before paragraph (a) insert—

“(za) which part of a Scottish taxpayer’s income consists of savings

income,”.

(5) 40In section 809H (charge on nominated income of long-term UK resident), after

subsection (3) insert—

“(3A) For the purpose of calculating income tax charged under subsection (2),

ignore section 6(2A) to (2C) (special rates of income tax for Scottish

taxpayers).”

(6) 5In section 989 (definitions), in the definitions of “additional rate”, “basic rate”

and “higher rate”, after “section 6(2)” insert “or (2B)”.

(7) In section 1 of the Provisional Collection of Taxes Act 1968 (temporary

statutory effect of resolution of House of Commons), after subsection (3)

insert—

“(3A) 10If a resolution specifies the basic rate, higher rate or additional rate of

income tax, the resolution has effect in relation to Scottish taxpayers

(within the meaning of Chapter 2 of Part 4A of the Scotland Act 1998)

as if it specified the rate calculated in accordance with section 6(2A) to

(2C) of the Income Tax Act 2007.”

(8) 15The amendments made by this section have effect in relation to the tax year

appointed by the Treasury under section 30(5) and subsequent tax years.

32 Definition of Scottish taxpayer for Scottish variable rate

(1) In Part 4 of the 1998 Act (power to vary income tax rate), for subsections (1) to

(6) of section 75 (Scottish taxpayers) substitute—

20“Sections 80D to 80F (definition of Scottish taxpayer) apply for the

purposes of this Part.”

(2) This section ceases to have effect at the end of the last year for which Part 4 has

effect (see section 30(2) and (4)).

Scottish tax on land transactions

33 25Scottish tax on transactions involving interests in land

(1) In Part 4A of the 1998 Act (as inserted by section 28), after Chapter 2 (inserted

by section 30) insert—

“CHAPTER 3 Tax on transactions involving interests in land

80I Tax on transactions involving interests in land

(1) 30A tax charged on any of the following transactions is a devolved tax—

(a) the acquisition of an estate, interest, right or power in or over

land in Scotland;

(b) the acquisition of the benefit of an obligation, restriction or

condition affecting the value of any such estate, interest, right or

35power.

(2) The tax may be chargeable—

(a) whether or not there is any instrument effecting the transaction,

(b) if there is such an instrument, regardless of where it is executed,

and

(c) regardless of where any party to the transaction is or is resident.

80J Certain transactions not taxable

(1) Tax may not be imposed under section 80I on so much of a transaction

as relates to land below mean low water mark.

(2) 5The following persons are not to be liable to pay a tax imposed under

section 80I—

(none) Government

A Minister of the Crown

The Scottish Ministers

10A Northern Ireland department

The Welsh Ministers, the First Minister for Wales and

the Counsel General to the Welsh Assembly

Government

(none) Parliament etc

15The Corporate Officer of the House of Lords

The Corporate Officer of the House of Commons

The Scottish Parliamentary Corporate Body

The Northern Ireland Assembly Commission

The National Assembly for Wales Commission

20The National Assembly for Wales.”

(2) Tax may not be charged in accordance with the provisions inserted by this

section on a land transaction within the meaning of Part 4 of the Finance Act

2003 unless section 34 (disapplication of UK stamp duty land tax) has effect in

relation to that transaction.

34 25Disapplication of UK stamp duty land tax

(1) Part 4 of the Finance Act 2003 (stamp duty land tax) is amended as follows.

(2) In section 48 (chargeable interests), in subsection (1)(a) for “the United

Kingdom” substitute “England and Wales or Northern Ireland”.

(3) In Schedule 4—

(a) 30Part 1 contains further amendments relating to the disapplication of

stamp duty land tax to Scotland, and

(b) Part 2 makes provision, in consequence of the disapplication of

paragraph 1(1)(b) of Schedule 10 to the Finance Act 2003 (prescribed

information in land transaction returns) to transactions relating to land

35in Scotland, about the supply of information to Her Majesty’s Revenue

and Customs.

(4) This section has effect in relation to land transactions with an effective date on

or after such date as is appointed by the Treasury by order under this

subsection.

(5) 40But this section does not have effect in relation to any transaction—

(a) effected in pursuance of a contract entered into and substantially

performed on or before the date on which this Act receives Royal

Assent, or

(b) effected in pursuance of a contract entered into on or before that date

45and not excluded by subsection (6).

(6) A transaction effected in pursuance of a contract entered into on or before the

date on which this Act receives Royal Assent is excluded if—

(a) there is any variation of the contract, or assignation of rights under the

contract, after that date,

(b) 5the transaction is effected in consequence of the exercise after that date

of any option, right of pre-emption or similar right, or

(c) after that date there is an assignation, subsale or other transaction

relating to the whole or part of the subject-matter of the contract as a

result of which a person other than the purchaser under the contract

10becomes entitled to call for a conveyance.

Scottish tax on disposals to landfill

35 Scottish tax on disposals to landfill

(1) In Part 4A of the 1998 Act (as inserted by section 28), after Chapter 3 (inserted

by section 33) insert—

“CHAPTER 4 15Tax on disposals to landfill

80K Tax on disposals to landfill

(1) A tax charged on disposals to landfill made in Scotland is a devolved

tax.

(2) A disposal is a disposal to landfill if—

(a) 20it is a disposal of material as waste, and

(b) it is made by way of landfill.”

(2) Tax may not be charged in accordance with the provision inserted by this

section on a disposal if the disposal is made before the date appointed under

section 36(4).

36 25Disapplication of UK landfill tax

(1) Part 3 of the Finance Act 1996 (landfill tax) is amended as follows.

(2) In section 40(1) (charge on taxable disposal), after “taxable disposal” insert

“made in England and Wales or Northern Ireland”.

(3) Schedule 5 contains further amendments relating to the disapplication of

30landfill tax to Scotland.

(4) This section has effect in relation to disposals made on or after such date as is

appointed by the Treasury by order under this subsection.

Borrowing

37 Borrowing by the Scottish Ministers

(1) 35The 1998 Act is amended as follows.

(2) Section 66 (borrowing by the Scottish Ministers etc) is amended as follows.

(3) For subsection (1) substitute—

“(1) The Scottish Ministers may borrow from the Secretary of State—

(a) any sums required by them for the purpose of meeting a

temporary excess of sums paid out of the Scottish Consolidated

5Fund over sums paid into that Fund,

(b) any sums required by them for the purpose of providing a

working balance in the Scottish Consolidated Fund, and

(c) any sums which in accordance with rules determined by the

Treasury are required by them to meet current expenditure

10because of a shortfall in receipts from devolved taxes, or from

income tax charged by virtue of a Scottish rate resolution,

against forecast receipts.

(1A) The Scottish Ministers may, with the approval of the Treasury, borrow

by way of loan any sums required by them for the purpose of meeting

15capital expenditure.

(1B) A sum is required for the purpose of meeting capital expenditure if the

expenditure would be capital expenditure for the purposes of accounts

under section 70.”

(4) In subsection (3) after “section” insert “from the Secretary of State”.

(5) 20After subsection (4) insert—

“(5) The Secretary of State may by order made with the consent of the

Treasury amend subsection (1A) so as to vary the means by which the

Scottish Ministers may borrow money.”

(6) Section 67 (lending by the Secretary of State) is amended as follows.

(7) 25In subsection (2) for “that section” substitute “section 66(1)”.

(8) In subsection (3) omit “increased”.

(9) After subsection (3) insert—

“(3A) An amount substituted under subsection (3) may be more or less than

the amount for which it is substituted but may not be less than £500

30million.”

(10) After section 67 insert—

“67A Lending for capital expenditure

(1) The aggregate at any time outstanding in respect of the principal of

sums borrowed under section 66(1A) shall not exceed £2.2 billion.

(2) 35The Secretary of State may by order made with the consent of the

Treasury substitute for the amount (or substituted amount) specified in

subsection (1) such amount as may be specified in the order.

(3) An amount substituted under subsection (2) may be more or less than

the amount for which it is substituted but may not be less than £2.2

40billion.

(4) A person lending money to a member of the Scottish Government is not

bound to enquire whether the member of the Scottish Government has

power to borrow the money and is not to be prejudiced by the absence

of any such power.

(5) The Scottish Ministers may not mortgage or charge any of their

property as security for money which they have borrowed under

5section 66(1A).

This is subject to section 66(2).

(6) Security given in breach of subsection (5) is unenforceable.”

(11) In section 114(1) (powers which may be exercised by modifying the 1998 Act),

after “sections” insert “66(5),”.

(12) 10In Schedule 7 (procedure for subordinate legislation), in paragraph 1, at the

appropriate places insert—