THOUSANDS of low-earning Scots could lose out on most of a promised tax cut this year because of a loophole.
Under the SNP’s overhaul of income tax, low earners should get a minimum tax break of £20 in 2018-19, but the extra will offset by a cut of up to £13 in means-tested universal credit.
An estimated 26,000 people in work are thought to be affected.
Finance Secretary Derek Mackay last month blamed the “complex interaction between Scottish income tax policy and entitlement to Universal Credit” for the glitch.
Labour MSP Mark Griffin urged the Scottish and UK governments to cooperate on a fix.
He said: “The tax and benefit system should be maximising the amount of money going to workers on low incomes. Instead this loophole is denying people on Universal Credit what SNP ministers promised would be a tax cut.”
A Scottish Government spokesperson said: “This issue highlights the complexities of our devolution settlement and shows why Scotland should have full powers over welfare.”
A spokesperson for the UK Department of Work and Pension said: "Universal Credit is a means tested benefit that gradually reduces as a person’s net earnings increase – this provides a smooth transition off benefits and into work
“The Scottish Government has significant powers over social security to both raise taxes and top up any reserved benefits.”
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