THE Scottish Government has announced the creation of a new higher-rate income tax bracket in Scotland to help plug a £1.5 billion funding gap.
The proposal, which will need to be approved by MSPs, would see a new bracket implemented across the country.
Speaking of the plan, Finance Secretary Shona Robison said that the budget proposals were coming amidst some of the most challenging financial conditions experienced in Scotland's devolved history.
However, some criticisms have been levied at the plan,s with leading fiscal think tank Fraser of Allander Institute (FAI) warning that the new tax band may only raise £60 million.
Deputy First Minister @ShonaRobisonMSP presents #ScotBudget to @ScotParl today.
— Scottish Government (@scotgov) December 19, 2023
This budget prioritises:
🔵protecting public services
🔵funding key missions on equality, opportunity, community
🔵investing in services and infrastructure
Watch at https://t.co/zWDxp2N6pM pic.twitter.com/sH8RJHBniN
How will the new higher-rate tax bracket in Scotland work and who has to pay it?
The new tax bracket being proposed by the Scottish Government would see earnings between £75,001 and £125,140 charged at 45%. This is three points higher than now.
Currently, earnings between £43,663 and £125,140 are taxed at 42%.
Today, the Deputy First Minister will announce the #ScotBudget at @ScotParl.
— Scottish Government (@scotgov) December 19, 2023
We are prioritising funding to invest in public services and support our key missions of equality, community and opportunity. @ShonaRobison visited @LarderTraining ahead of today's budget. pic.twitter.com/xtfVcFsoGp
What is my tax bracket currently?
According to the Scottish Government website, there are five tax brackets in Scotland, earnings up to £12,570 not taxed.
Income between £12,571 and £14,732 is taxed at 19%, while income between £14,732 and £25,688 is taxed at 20%.
The intermediate rate (£25,689 to £43,662) is set at 21%, and the higher rate (£43,663 to £125,140) is 42%.
Those on the current highest bracket pay 47%, with this only being applicable to those earning over £125,140.
What will the new Scottish tax brackets be?
The new system will see a sixth tax band created. This will charge a rate of 45% for earnings between £75,001 and £125,140.
This highest tax band, for earnings over £125,140, will rise from 47% to 48%.
The three lowest bands will see no increase to their rates, while the starter and basic rate bands will increase by the level of inflation.
The tax bands will be:
- Starter rate: £12,571 - £14,876, taxed at 19%
- Basic rate: £14,877 - £26,561, taxed at 20%
- Intermediate rate: £26,562 - £43,662, taxed at 21%
- Higher rate: £43,663 - £75,000, taxed at 42%
- Advanced rate: £75,001 - £125,140, taxed at 45%
- Top rate: Above £125,140, taxed at 48%
Do people in Scotland pay higher tax than elsewhere in the UK?
According to the Scottish Government, the tax changes mean that the majority of Scots will pay less tax than if they lived elsewhere in the UK.
Those earning less than around £28,850 – which is 51% of Scottish taxpayers (1.53 million people) – will continue to pay slightly less income tax in 2024-25 than if they lived elsewhere in the UK, the Government briefed.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel