Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Is it time to get out of Scotland?

The country's move towards independence could affect savers, writes Harvey Jones

Harvey Jones
Saturday 24 April 1999 18:02 EDT
Comments

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

If you don't live in Scotland you may find it hard to get worked up about the current election campaign for the Scottish Parliament.

But you may be a lot more involved than you thought. If you have a life, pensions or investment plan with, for example, Scottish Widows, Standard Life or Scottish Provident - and millions do throughout the UK - then you are.

And this means that any movement towards an independent Scotland could have a financial impact on you, even if you live in Sussex.

Reports have been bubbling up over fears that if Scotland one day follows the Scottish National Party into full independence, Scottish-based companies could find themselves struggling under a harsher tax regime than companies elsewhere in the UK.

Scottish Widows recently expressed concern over how independence might hit ordinary policy holders, while reports surfaced that Standard Life was planning a move to Newcastle.

Sniffing an opportunity, the Greater Peterborough Investment Agency launched a direct mail campaign aimed at persuading Scottish financial institutions to relocate there.

Full independence would take years and may never come at all, but many financial decisions are made for the long term. If you are taking out a 25-year endowment plan with a Scottish-based company, a different regulatory or taxation framework in Scotland could hit your policy.

For example, a higher level of corporation tax would be passed on to policy holders everywhere, making products expensive and uncompetitive.

So should you be keeping your financial interests clear of Scotland? Understandably, Scottish life companies are falling over themselves to deny there will be any problem. Alan Young, communications manager with Scottish Widows, insists the life companies will not suffer under a Scottish tax-raising regime. Full independence might pose "hypothetical" problems however.

"Scottish-based companies are concerned because they transact the vast majority of their business south of the border. If Scotland pulled out of the UK then selling life policies, pensions and investments could prove difficult across what would be national frontiers."

However, he says, plans to further erode trading barriers within the European Union would probably offset any problems. And he reassures policy holders that if independence ever happened, Scottish Widows would put their interests first.

"All the companies have said they will take whatever action is necessary to protect policy holders. If the vast majority are south of the border then they would be looked after."

Scottish companies remain deliberately vague about what action they would take, although the obvious step would be to set up a head office in England as a tax base, while retaining the bulk of the operation in Scotland.

"I don't see any circumstances in which we would relocate lock, stock and barrel to England," Mr Young says. So Peterborough may be disappointed after all.

Standard Life has been laughing off the press reports of its plans to move to Newcastle. However, Tom King, its head of corporate affairs, admits the company took legal advice over how to move its tax base if the rate of corporation tax rose in Scotland after independence. "This type of contingency planning is something any good company would do. We would want to make sure policy holders would not be affected, but we have no plans to move."

Alasdair Buchanan, marketing consultant with Scottish Life, says any tax changes may actually work in favour of the customer. There is a chance that the SNP would actually reduce corporation tax, as it is fond of citing Ireland as a small, competitive economy with tax benefits for companies.

"Financial services are very important to the Scottish economy and employ many people. I doubt the SNP want to damage them in any way," he says.

Marianne Cantley, head of marketing at Edinburgh Fund Managers, says increased globalisation and the greater mobility of international companies would make it relatively easy to escape unduly harsh tax regimes. "We are a global company operating throughout the world. Different countries have different tax regimes and we have the flexibility to cope with these," she says.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in