Tech workers ‘avoiding Scotland’ over higher income tax

Hello and welcome to our daily digest of business, financial and economic news from around Scotland.

1. The head of one of Scotland’s largest home-grown software firms has warned that income tax divergence with England is making it harder to fill jobs in the technology sector.

Keith Neilson, chief executive of Craneware, said there were already “not enough” people in Scotland to keep up with the pace of growth in the industry.

Competition for skilled workers is fierce, and the ability of many people to work remotely means fewer are willing to relocate given they would have to pay more income tax in Scotland.

Neilson said: “Unfortunately that is the reality of the tax regime we have got. The people who are able to work remotely or travel are the highest valued members of tech. We need more in Scotland, we just don’t have enough.”

Craneware, which sells revenue monitoring and analytics products to the healthcare market in the United States, reported strong interim results with revenue up 8 per cent to $91.2 million.

Pre-tax profit in the six months to the end of December increased by 13 per cent to $5.9 million, while the interim dividend was 13p, compared with 12.5p for the previous financial year.

2. Jeremy Hunt has been urged to ditch a profit levy on oil and gas as the economy of Aberdeen is suffering.

Research published from EY, the accounting firm, suggests Aberdeen will have the lowest growth of the UK cities it monitors over the next three years.

With annual gross value added (GVA) growth of just 0.8 per cent, the granite city is lagging behind other places including Dundee at 1.4 per cent and Edinburgh and Glasgow at 1.8 per cent each.

Aberdeen, the oil capital of Scotland, is suffering because of the oil and gas profit levy

GETTY IMAGES

The EY report said that Aberdeen’s slow growth was “likely explained by the challenges in the oil and gas sector” while the profit tax had acted as a barrier to investment.

Ryan Crighton, policy director at Aberdeen & Grampian Chamber of Commerce, said: “The windfall tax needs to go, it is not acceptable for Aberdeen to pay the price for economic problems it did not create. The North Sea is being used as a cash cow to plug financial holes created by the financial mismanagement of others and Aberdeen is clearly paying the price.”

3. A Scottish tax on companies which occupy larger premises will cost businesses almost £63 million over the next year.

The Scottish Retail Consortium called for parity with England, which does not enforce a higher property charge on premises with a rateable value of more than £100,000.

It is thought that 11,670 commercial premises across the country are affected by the tax, which comes on top of any existing non-domestic rates bills.

David Lonsdale, director of the Scottish Retail Consortium, said: “Shops and other businesses liable for the higher property rate in Scotland continue to pay more than their counterparts in England, to the tune of £63 million annually.”

4. A company planning to build a subsea cable manufacturing plant is opening a training centre for apprentices. XLCC has signed a lease on premises in Irvine, Ayrshire, and hopes to have it ready in June.

Scottish Enterprise has provided a £200,000 grant towards the fit-out of the unit, which is expected to train 60 people over the coming years.

XLCC hopes to have its training centre in operation by June

XLCC

The site will be the main base for cable jointer apprentices, who will work in XLCC’s Hunterston factory once it opens.

5. Braveheart Investment Group said that the sale of one of its portfolio companies had been completed.

Phasefocus Holdings, an optical imaging specialist based in Sheffield, has been purchased by Bruker UK. AIM-listed Braveheart said it received proceeds of £2.1 million from its share of the deal. Trevor Brown, Braveheart chief executive, said that represented a gain of more than £1.3 million.