Scottish Budget: income tax

How the Budget changes affect your income tax

Income tax own pic

Kate Forbes announced marginal changes

Increasing the starter and basic rate bands by inflation, as announced in the Scottish Budget, means Scots will start to pay more income tax than someone living elsewhere in the UK when they earn £27,850, compared to £27,393 currently.

Scots earning below this amount will pay up to £21.62 less income tax than if they lived elsewhere in the UK.

However, the Chartered Institute of Taxation says that the UK Government’s decision to increase National Insurance by 1.25 percentage points from next April will mean that the effect of today’s announcements will be cancelled out.

Workers earning more than the tax-free personal allowance of £12,570 will see their take home pay reduced compared with this year. 

Those with earnings between £43,663 and £50,270 will pay a marginal rate of tax (income tax and NI) of 54.25% next year on that portion of their income. For the current tax year (2021/22), that figure is 53%.

This is because the upper earnings limit for National Insurance is linked to the UK higher rate threshold for income tax, which is set higher than the Scottish threshold.

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