THE UK’s spending watchdog has backed down in a row with the Scottish Government over how many people pay more income tax under the SNP.

The National Audit Office (NAO) admitted it had issued an “overestimate” of the number, and revised it down into line with the SNP’s own figure.

The SNP are demanding an apology from the Scottish Tories for their “shameful” claim the Scottish Government bullied the NAO on the issue.

Earlier this month, the NAO sent an embargoed report to the media stating it believed that more than half a million Scots paid more income tax than their English counterparts.

Using its own analysis, it said around 507,000 people paid more north of the border because of the SNP’s decision to freeze the 40p threshold at £43,000 in 2017/18.

In England and Wales, the threshold is £45,000, meaning higher and additional rate taxpayers in Scotland pay up to £400 more.

The NAO figure was politically explosive as it suggested one in five Scots taxpayers were affected, far more than previously thought.

The SNP’s estimate was 366,000 people, or one in seven of Scotland’s 2.6m taxpayers.

After an intervention by the Scottish Government officials, the NAO took the unprecedented step of withdrawing the report to check the figure.

However the move came too late for many newspapers, who reported the original figures.

The row led to the Scottish Tories accusing SNP ministers of “bullying” the NAO into cancelling publication of the report.

On Monday, the NAO issued a revised version of its report.

This put the number of Scottish taxpayers expected to pay the higher rate of income tax in 2017/18, and hence pay more than their English equivalents, at 386,000.

This was based on an an HMRC estimate published in May.

The NAO’s press release stated in its final footnote: “An earlier copy of this report was shared under embargo with media outlets on the 13 November for publication on 14 November.

“Unfortunately that version contained an overestimate of the number of Scottish taxpayers who earn above the higher rate income tax threshold and subsequently the number of people that would pay the basic rate of income tax if they were not Scottish taxpayers.

“The NAO identified this at a late stage and immediately took the decision to postpone the report’s publication.”

SNP MSP Gillian Martin said: “It’s welcome that the National Audit Office have updated their initial analysis.  

“However, the behaviour of Murdo Fraser and the Scottish Conservatives was shameful – attacking the impartiality and character of civil servants for a cheap political hit.

“Mr Fraser should now accept he made a serious error of judgement and it is only right that he apologise.”

A Scottish Conservative spokesman said: “We know the SNP have form in seeking to make changes to reports that they don’t agree with.

“On this occasion, the National Audit Office has reduced its estimate as a result."