The Scottish Government's long-awaited tax changes have come into effect today (Thursday, April 6), seeing major reforms to the top rate.
The changes come as ministers claim the reforms will allow them to raise an extra £129 million in 2023/24.
The tax changes were originally announced by the former Deputy First Minister John Swinney and were passed with the approval of MSPs earlier this year.
With these changes, many will be wondering how this will affect their rate and how much they will be paying going forward.
Why did the Scottish Government make changes to the top rate of tax?
The new Deputy First Minister Shona Robison said the changes represent a 'fairer' taxation system that ensures those who can, contribute more.
It is said that this will "strengthen" the Scottish Government's ability to continue providing programmes like free prescriptions.
Robison said: “The decisions we have made on income tax are fair and progressive by ensuring that those who can, contribute more.
“They strengthen our social contract with the people of Scotland who will continue to enjoy many benefits not available in the rest of the UK such as free prescriptions.
“The additional revenue will help us invest in our vital public services including the NHS, above and beyond the funding received from the UK Government.
“At the same time, the majority of taxpayers in Scotland will still be paying less income tax than if they lived in the rest of the UK.
“Now that the new financial year has started, I’d also encourage people to check that the tax code is correct on the first payslip they get.
“If you think your tax code is wrong, you can check your details with HMRC who will be able to help.”
How much tax will I be paying amid top rate changes in Scotland?
The tax reforms will see both the higher and top rates of income tax rise by 1p, seeing these increase to 42p and 47p respectively.
While the threshold for the 42p rate will be frozen, all Scots earning £125,140 a year or more will pay the very top rate of tax.
The 42p rate applies to those earning between £43,663 and £125,140 a year.
Rates for lower-income Scots will stay the same with those earning £14,733 to £25,688 taxed at a rate of 20p.
How do top-rate taxes in Scotland compare to those in England?
The top rate of tax is now different to that in England with those on the English higher rate (£50,271 to £125,140) taxed at 40p while those on the additional rate (over £125,140) are taxed at 45p.
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