Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner. Facebook Messenger An icon of the facebook messenger app logo. Facebook An icon of a facebook f logo. Facebook Messenger An icon of the Twitter app logo. LinkedIn An icon of the LinkedIn logo. WhatsApp Messenger An icon of the Whatsapp messenger app logo. Email An icon of an mail envelope. Copy link A decentered black square over a white square.

Increasing income tax not a cure for country

Callum Wilson, tax partner in the Aberdeen office of Johnston Carmichael
Callum Wilson, tax partner in the Aberdeen office of Johnston Carmichael

When Chancellor Philip Hammond sat down following his Budget speech I was not gripped by a sense of wild excitement.

The well-trailed news on transferable tax allowances between the old and new owners of oil and gas fields, and the surprise increase in the R&D tax credit to 12% have positive implications.

Companies which invest in technologies aimed at either extending fields’ productive life and/or decommissioning should, hopefully, have more to shoot at, more time to shoot at it and more help with the cost of developing the fire power.

The huge financial pressures on the industry remain in place – the superabundance of “to let” signs around the north-east is testament to that.

But there are undoubtedly more deals happening now than there were a year ago. The optimism remains cautious but the changes seem like a step in the right direction.

Beyond that, the headline-grabbing changes on stamp duty, business rates and the higher rate threshold won’t apply in Scotland – except to the extent that they put pressure on the Scottish Government to respond in its Budget on December 14.

If you examine the detailed workings of the tax system, this pressure plays into the debates about the UK’s stubborn problem of productivity and the rate of income tax in Scotland.

Under the present system, your personal tax allowance and the tax relief you receive for pension contributions are “tapered” away at £1 for every £2 you earn above certain limits.

If both reliefs are being tapered away at once, then you end up paying tax on £2 for every extra £1 that you earn – that’s already a marginal tax rate of up to 90% (92% if you add national insurance).

Marginal rates of 60% and 67.5% are also encountered as your income grows.

You need to be earning more than £210,000 before the marginal rate of tax returns to 45% of your next £1 of profit.

Economists argue over where the optimum rate of tax should be set in order to generate most revenue. Most would agree that 92% is too high and 100% tax is, well, communism.

Small and micro enterprises – the backbone of our economy, as politicians of all persuasion are fond of repeating – and their owners might well find themselves in the income bracket most affected by these high marginal rates of tax.

How would that make you feel if you were thinking about borrowing money to invest and grow your small business?

Whatever your answer, increasing the rate of income tax does not sound like a cure for Scotland’s productivity issues.

Housing incentives were the chancellor’s other big play and the reaction to these has been mixed.

Commentators seem sceptical about whether the changes will lead to more affordable and social housing.

They all seem to agree that this is a government issue that should be funded directly out of taxation.

Why? Tax can be used as a carrot as well as a stick.

We already offer inheritance tax relief to investors in businesses, so why not offer it to long-term investors in regulated social housing or public infrastructure projects?

At the end of 2016/17, the total market value of adult Isa (individual savings account) holdings stood at £585billion, with more than £300billion held in cash Isas alone. Just saying.