As someone who works within the UK’s financial services industry, I have to welcome the ‘No’ vote in last week’s referendum on independence, but be warned that changes will come regardless of the result.
The prospects of months of messy negotiations, uncertainty over the division of national assets and debt, and the currency arrangements of an independent Scotland had been weighing on the confidence of investors over the past few weeks, especially as polls had tightened.
Although sterling fell against the dollar in the weeks before the vote, the NO was a relief to investors and financial markets, reflected by sterling bouncing back on Friday. The FTSE saw similar movements as domestic and global investors alike reaffirmed their faith in the buoyant UK economy. While things like currency and regulation can be scored off the list of considerations, the impact of any further legislative changes, particularly those around taxation, will move up the agenda. Devolution of powers from Westminster to Scotland could lead to regional tax powers, impacting on pensions and other savings plans which may mean investors who have the means to take advantage of tax breaks on pensions should make the most of them while they can.
If Scotland’s income tax rate ends up differing considerably from the rest of the UK, people may move or rearrange their business affairs. We could also see deliberate tax competition with the rest of the UK. A number of important tax reliefs take the income tax rate as their baseline, such as pension’s relief and gift aid. There may be plenty of unraveling to be done in the months ahead!
Each week the Chamber will introduce you to one of its Directors. The Chamber is managed on a day to day basis by a dedicated team of 5 and lead strategically by myself and 13 Non Executive Directors who offer their time on a voluntary basis and cover a cross section of business sectors in our district.