THE majority of Scottish workers are in line for a tax cut from the SNP Government Budget, the Finance Secretary has announced.
Shona Robison told MSPs at Holyrood that the basic and intermediate tax rate thresholds would “increase this year by 3.5%, effectively twice the rate of inflation”.
If the thresholds for income tax bands are frozen while wages increase due to inflation, more people end up paying higher rates of tax. The UK Government has frozen its income tax bands until 2028.
Scottish Government figures show that the proposed tax cuts, which will come into effect from April 6, 2025, mean that workers will begin to pay the basic tax rate of 20% on earnings above £15,398. As it stands, the 20% rate is paid on earnings above £14,877.
The intermediate rate of 21% will be paid on earnings above £27,492. As it stands, this intermediate 21% rate is paid on earnings above £26,562.
The Higher, Advanced, and Top rates of Scottish income tax will remain frozen.
'60% of Scots will be better off because they live in Scotland'
Robison told MSPs that the changes mean “more of people's money will be taxed at the starter and basic tax rates”.
“This also means that the majority of taxpayers in Scotland will continue to pay less income tax than in the rest of the UK,” she went on. "And I can commit today that this will remain true until at least the end of this Parliament.”
Robison added: “Taking our tax and social security choices together, including on pension age Winter Fuel Payments, 60% of Scots will be better off because they live in Scotland.”
The Scottish Government said that based on Scottish Funding Council forecasts, they estimate that “taxpayers earning around £30,300 will pay slightly less Income Tax than they would elsewhere in the UK in 2025-26”.
“The pressing need to overhaul council tax has once again been ignored, while the Scottish Government has once again missed an opportunity to use its tax powers over aviation to reduce emissions,” she went on.
“If the Scottish Government is serious about delivering its four missions, there is an urgent need for more fundamental tax reform to raise revenue and create a fairer tax system.”
Robison confirmed that during her draft Budget speech that the SNP Government would not impose a freeze on council tax, opening the door for local authorities to bring in their own increases next year.
However, she said that there should not be large increases due to a £1 billion increase in the local government funding settlement.
Jamie Livingstone, the head of Oxfam Scotland, argued that the tax changes did not go far enough.
He said: “This budget undoubtedly delivers some much-needed progress, like ending the two-child limit, but ultimately the First Minister’s promises to eradicate child poverty and tackle climate change will remain built on sand without further new public spending funded by bold, long-term fair tax reform.
“The real test of the new Tax Strategy is whether it delivers a tax system that delivers fairness, not one that props up a financial house of cards.”
Neil Winstanley, an Edinburgh-based chartered financial planner at Quilter Cheviot, said the tax changes signalled “a focus on easing the burden for lower and middle-income earners compared to the continued freeze of thresholds in the rest of the UK”.
He went on: “This move, alongside a commitment to no new bands or rate increases for the remainder of the parliament, offers a degree of certainty for taxpayers at a time of economic turbulence.
“However, it also highlights Scotland’s increasingly distinct tax regime, where higher earners continue to shoulder a disproportionately greater burden compared to the rest of the UK.”
