TORY bosses have demanded Scotland’s NHS heroes say thank you to Rishi Sunak for the bonus being given to them by the Scottish Government.
Nicola Sturgeon announced the one-off payment on Monday at the SNP’s annual conference. She revealed that every NHS staff member and adult social care worker in the country will be eligible.
The £500 bonus scheme will be funded from the Scottish Government’s Covid-19 support package and applies to employees employed since March 17. However, while the Scottish Government can make the payment, they don’t have powers over taxes to make it tax-free.
In her speech, the First Minister urged the Prime Minister to act. She said: “The Scottish Government is choosing to do this now from our own resources. We are asking nothing of the UK Government – with one exception.
“Because we don’t control the full tax and benefits system, we don’t have the power to make this payment tax free. But Prime Minister, you do. So I am asking you this: Please allow our health and care heroes to keep every penny of Scotland’s thank you to them. Do not take any of it away in tax.”
FACT CHECK: Tory excuses over £500 NHS bonus simply don't add up
Just a few hours later, the Treasury said no, telling Sturgeon that if she wanted the payment to be tax-free that she would then need to increase the bonus to a level high enough to cover the tax take.
In the Commons yesterday, the SNP shadow chancellor Alison Thewlis said powers over tax allowances, exemptions and national insurance are reserved to the UK Government, asking in the Commons: “Will the Chancellor do the right thing and ensure this festive gift of goodwill is not clawed back by HMRC?”
Treasury minister Steve Barclay replied: “Income tax on these payments is actually paid to Scotland, not to Westminster, and the Scottish Government has the power and the funding to gross-up the payment if it wishes.”
SNP MP Tommy Sheppard followed up and warned the UK Treasury will receive a “windfall” from the “thank you” payments. Barclay replied: “The approach the UK Government is taking to these Scottish payments is exactly the same as applied recently in Wales, but just to further reinforce the point I made a moment ago -– while decisions to exempt these payments are reserved, the Scottish Government will keep all the income tax receipts from these payments.
“So if they wish for NHS and care workers to receive £500 net of tax, which is what they say is their wish, then they can simply increase the value of the payments going to them.”
The Scottish Tories then took to Twitter to say: “Thank you to all NHS and social care workers, from the @ScotTories and @RishiSunak.
“UK Government spending means Scottish NHS and social care workers will get a £500 bonus. Join us in saying #ThankYouRishi.”
Thank you to all NHS and social care workers, from the @ScotTories and @RishiSunak.
— Scottish Conservatives (@ScotTories) December 1, 2020
UK Government spending means Scottish NHS and social care workers will get a £500 bonus.
Join us in saying #ThankYouRishi pic.twitter.com/BwcxQEpsDL
READ MORE: Brass-necked Tories demand Scots thank them for SNP's £500 NHS payment
Analysis carried out by the Fraser of Allander Institute suggested that a basic-rate taxpayer getting a £500 bonus would take home just £340 of that bonus after tax and national insurance. If the bonus was exempt from income tax, the basic-rate payer would take home £440.
However, the Scottish Government’s powers over devolved income tax do not give it the ability to exempt income tax on these bonuses – only the UK Government can do that, though the FAI said making bonuses tax free wasn’t a good policy.
“There’s a reason bonuses are taxed; if they weren’t, everyone would want paid in bonuses rather than regular pay. Making an exception to the rule once opens the possibility of endless future lobbying for tax-exempt bonuses – which is not something any government should be keen to encourage,” it said. It argued that if the SNP wanted employees have £500 after tax, the “solution is to pay a higher gross bonus.”
There was a similar row in Wales over the autumn, when Labour First Minister Mark Drakeford announced a £500 coronavirus bonus for social care workers. They, too, asked for the Treasury to make the payment tax free. They too were told no.
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