Proposals to change the rate of income tax in Scotland could cause confusion over pension tax relief, providers have warned.
Holyrood is currently lining up a draft budget for the year ahead, and is considering income tax changes including a new basic rate and additional division into six tiers.
Providers argue that this would interfere with the current system for automatically calculating relief across the UK based on the 20 per cent basic rate.
AJ Bell head of technical Gareth James told the Financial Times: “If the Scottish basic rate of income tax was anything other than 20 per cent this would result in a potentially large number of people automatically receiving too little or too much pension tax relief.”
Hargreaves Lansdown financial planner Danny Cox says: “Registering people as either Scottish taxpayers or ‘rest of the UK’ is not something we currently do…We would have to do it pretty quickly in order to put the right claims in place.”
Holyrood’s draft budget will be published on December 14.