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Scotland's higher earners to pay more tax than rest of UK as SNP unveils Budget

Scotland's higher earners to pay more tax than rest of UK as SNP unveils Budget
3 min read

Scotland's higher earners are to pay an extra £164m in income tax under plans set out by the SNP.

Using Holyrood's new power to vary income tax bands for the first time, Scottish government finance secretary Derek MacKay revealed that a new 46p rate would be introduced for those earning more than £150,000 a year. In the rest of the UK, the rate is 45p.

Workers earning more than £24,000 will pay a new 21p rate, compared to 20p in the rest of the UK, while a 41p higher rate will kick in on earnings above £44,274.

However, a 19p "starter rate" will also be introduced for Scots earning between £11,850 and £13,850, meaning their tax bill will be lower than those on the same wages in the rest of Britain.

Meanwhile, anyone earning between £13,851 and £24,000 will stay on the current 20p basic tax band.

The Scottish government said that the changes would mean more than two-thirds of Scots would pay less than they do now, with 55% paying less than they would if they lived in the rest of the UK.

Mr MacKay said: "Our reforms will ensure that the vast majority of taxpayers are protected, that income tax becomes more progressive, that revenues are generated for investment in public services and that - coupled with our spending choices - there will be a positive impact on the economy."


The Budget also confirmed that the 1% public sector pay cap will be lifted in Scotland.

Those earning under £30,000 will get "at least" a 3% pay rise, Mr Mackay said, while he committed to a 2% pay rise for those earning over £30,000, with a cap on the increase for those earning over £80,000.

Among the key spending commitments were £110m for reform of primary care and £17m for mental health, £243m for the expansion of early learning and childcare and £600m for broadband expansion.

Following a UK government Budget announcement that exempted many first-time buyers from stamp duty, Mackay announced a similar measure which will take them out of land and buildings transaction tax (LBTT) - the Scottish equivalent - for house purchases valued up to £175,000.

Mr Mackay said the budget used the powers of the parliament “sensibly” and in the interests of the country as whole.

“It is a budget for fairness and a budget for growth,” he said.


Scottish Labour leader Richard Leonard described the Budget as "Tory-lite".

He said: "This parliament was designed to be a vehicle for change, to take Scotland to a better place and to bring decision making closer to the people of our country.

"While the Tories force austerity on the UK, we in Scotland should be using the powers of our parliament to deliver an alternative. Scotland needs real and radical change, not tinkering around the edges, and it should be based on the principle of from each according to their means, to each according to their needs

"A penny on the top rate just doesn’t do it. This Tory-lite draft budget fails on all of those counts."

Scottish Tory shadow finance secretary Murdo Fraser said: "This Nat Tax will hit nearly half of Scottish workers in the pocket.

"That is a tax on aspiration, a punishment for daring to work hard, and a direct breach of the promise made by the SNP in its election manifesto."


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