Chancellor Scraps VAT Charge For Police And Fire Service In Scotland

22 November 2017, 15:05


Chancellor Philip Hammond has confirmed he will scrap the requirement for the police and fire service in Scotland to pay VAT - insisting people north of the border should not lose out because of the "obstinacy" of the Scottish Government.

Police Scotland and the Scottish Fire and Rescue Service have had to pay the levy since they were created in April 2013, and are the only such services required to do so.

Mr Hammond said SNP ministers had been aware the two organisations - formed with the merger of the previous regional forces - would be subject to the charge.

But, delivering his Budget to MPs in the House of Commons, the Chancellor said he had been "persuaded" by the 13 Scottish Tory MPs elected in June to axe the charge from April 2018.

Mr Hammond said: "The SNP knew the rules, they knew the consequences of introducing these bodies and they ploughed ahead anyway.

"My Scottish Conservative colleagues have persuaded me that the Scottish people should not lose out because of the obstinacy of the SNP government."

He also announced the Scottish Government would be in line for £2 billion more cash as a consequence of spending decisions made in the Budget.

Scottish Tory leader Ruth Davidson said on twitter that her party was "cleaning up the SNP's mess when it comes to police and fire service VAT payments".

The decision to scrap VAT payments for the police and fire services in Scotland comes after sustained calls from the Scottish Government.

But SNP ministers also want the Chancellor to refund the £140 million the two organisations have paid so far.

First Minister Nicola Sturgeon said the move was "long overdue", adding that it was "an absolute disgrace that it has taken the UK Government so many years to do the right thing here".

She said: "Police Scotland and the fire service in Scotland should never have been paying VAT and they are the only emergency services in the UK that do so."

Deputy Chief Constable Iain Livingstone of Police Scotland said: "The VAT issue has been a significant financial burden since the creation of Police Scotland so I welcome the Chancellor's announcement."

Mr Hammond's Budget also included a freeze on spirits duty, making a bottle of whisky £1.15 cheaper than it would otherwise have been since the duty rise ended in 2014, according to the UK Government.

He also announced a new transferable tax history scheme for the oil and gas sector, which ministers say will encourage investment in the North Sea, safeguarding jobs there.

Meanwhile some 2.4 million Scots will benefit from the increase in personal allowance - the amount people can earn before they have to pay income tax.

While much of the control over income tax is now devolved to Holyrood, Westminster retains authority over the personal allowance threshold, which is to increase from £11,500 to £11,850 in April 2018.

Scottish Secretary David Mundell said: "This Budget demonstrates the UK Government is delivering for Scotland."

With progress being made on two further city deals in Scotland, covering the Tayside and Stirling and Clackmannanshire areas, Mr Mundell added: "From support for city deals and some of our finest charities to landmark tax measures on oil and gas and whisky, this Budget backs Scotland's great industries.

"This is in addition to the £2 billion of extra spending power the Scottish Government will have as a result of this Budget.

"This Budget will directly benefit people right across Scotland as we work to create an economy fit for the future."