Scottish variable rate facts for kids

The Scottish variable rate (SVR) was a special rule that would have let the Scottish Government change the main income tax rate in the United Kingdom. This change could have been up or down by a small amount (up to 3 pence for every pound). However, this power was never actually used. The Scottish Government decided not to use it in 2007. Later, a new law called the Scotland Act 2012 gave the Scottish Parliament a different way to set its own Scottish rate of income tax.

What Was the Scottish Variable Rate?

When the Scottish Parliament was being created, the UK Parliament in Westminster decided what powers Scotland would have. Many important things, like taxation, were kept by the UK Parliament. These are called "reserved matters."

But Scotland wanted more control over its own money. So, as a compromise, the UK Parliament agreed to let Scotland change income tax. People in Scotland voted for this idea in the 1997 referendum.

How the Power Was Granted

Because of this vote, the Scotland Act 1998 was passed. This law gave the Scottish Parliament the power to change income tax by up to 3 pence (either up or down) for every pound earned.

This power was often called the tartan tax. A politician named Michael Forsyth first used this name. He used the word 'tartan' to suggest it would be an extra tax just for people in Scotland. But the name "tartan tax" only really made sense if the tax went up. No special name was made up if the tax went down!

Why It Was Never Used

The Scottish variable rate was a power that was available but never put into action. The Scottish Government decided not to use it in 2007. Later, the Scotland Act 2012 introduced a new system. This new system gave the Scottish Parliament more direct control over setting its own income tax rates. This meant the old Scottish variable rate was no longer needed.

See also

• Fiscal autonomy
• HM Revenue and Customs
• Scottish Consolidated Fund
• Taxation in the United Kingdom