Your IndustrySep 19 2014

UK needs to prepare for devolution tax effects: Aegon

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Aegon has warned that the shape of the financial services industry may be changing as a result of the Scottish referendum despite the outcome of a ‘no’ vote, suggesting that each country in the UK may end up with different tax powers as a result of devolution across the UK.

Yesterday’s referendum results, revealed this morning (19 September), showed that 55 per cent had voted against Scottish independence while roughly 45 per cent voted for it.

Speaking to FTAdviser, Steven Cameron, Aegon’s regulatory strategy director, said: “I don’t have a particular wish for which powers might be devolve. I’m under no illusion that they key driver behind devolved powers has nothing to do with financial services but will be to do with expenditure.

“The Scottish government already has powers to vary income tax rates. From April 2016 it will have greater powers - so the Scottish government will decide how much to charge Scottish residents.

“We face the Welsh and Irish having more devolved powers. Financial services needs to be able to cope with [the potential for] all UK customers being subject to different tax regimes under new devolved powers - not just for Scotland but for all parts of the UK.”

Mr Cameron added of today’s result: “We’ve been politically neutral throughout [the referendum]. Now a clear decision will continue to focus on customers throughout the UK so its business as usual.”

Following the outcome of the referendum this morning, a spokesperson for Zurich agreed that there may still be changes in the UK following the ‘no’ vote.

“The vote in Scotland to remain part of the UK may still bring some changes. We will work through the proposals and likely changes for increased devolution which follow and what they mean for our business.

“This new world could affect many things across the board – in particular taxation, welfare and public spending. In turn, these have a direct impact on pensions, investments and public spending at the very least.

“The deadline for change is likely to be sooner than had been proposed for full independence, which gives everyone less time to prepare, but we will keep our customers, employees and distribution partners informed along the way so there are no surprises.”

A spokesperson for Friends Life said the focus should be on the financial services industry “to continue to focus on providing the best service to customers both north and south of the border”.

“We understand that the debate leading up to the referendum caused some uncertainty among customers and we believe it is positive that this uncertainty has been resolved.

“However, we recognise that further constitutional change is likely and we will consider the implications of any such changes for our customers and other stakeholders in our business to ensure their interests are represented and protected.”