New proposed income tax rates for people in Scotland due to start from April
The Scottish Government has confirmed that income tax rates north of the border will be frozen until at least the end of this Parliament in 2026. During the Budget on Wednesday, Finance Secretary Shona Robison also announced that the basic and intermediate rate thresholds will be frozen, effectively pulling more Scots workers into lower tax bands.
The SNP has introduced additional tax bands since 2017 and Ms Robison said the decision to freeze rates means that the majority of people in Scotland will pay less income tax than those in the rest of the UK. However, people in Scotland begin paying more in tax after earning more than £28,800 a year and the difference in thresholds with England, Wales and Northern Ireland increases significantly on earnings of more than £50,000 a year.
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That, alongside the freezing of tax thresholds, saw the levels of tax between Scotland and the rest of the UK diverge significantly.
If confirmed by MSPs in February, the changes in the Budget for 2025/26 mean the basic and intermediate rate thresholds will increase by 3.5 per cent to £15,397 and £27,491 respectively.
The higher, advanced and top rate thresholds will be maintained at £43,662, £75,000 and £125,140 respectively.
The Finance Secretary said her tax plans will provide certainty to workers across Scotland. She told MSPs: “I have decided to provide tax support for low and medium-income earners. The basic and intermediate rate thresholds will increase this year by 3.5%, effectively twice the rate of inflation.
“That means more of people’s money will be taxed at the starter and basic rates. It also means that the majority of taxpayers in Scotland will continue to pay less income tax than in the rest of the UK.
“This will remain true until at least the end of this Parliament while, as with the UK, thresholds for higher, advanced and top rates will be maintained at their current levels.”
Ms Robison said decisions to increase tax among middle and high earners means that Scotland will see an additional £1.7 billion in its budget.
She added: “Setting out our plans now for the rest of this Parliament will provide certainty, allowing taxpayers to better manage their finances and businesses to plan and make investment decisions with confidence.”
Scottish income tax thresholds
The table below shows the 2024/25 Scottish Income Tax rates you pay in each band if you have a standard Personal Allowance of £12,570. You do not get a Personal Allowance if you earn over £125,140.
2024/25 | Taxable Income | Scottish Tax Rate |
Personal Allowance | Up to £12,570 | 0% |
Starter rate | £12,571 to £14,876 (rising to £15,397) | 19% |
Basic rate | £14,877 to £26,561 (rising to £27,491) | 20% |
Intermediate rate | £26,562 to £43,662 | 21% |
Higher rate | £43,663 to £75,000 | 42% |
Advanced rate | £75,001 to £125,140 | 45% |
Top rate | over £125,140 | 48% |
Tax thresholds in England and Wales 2024/25
2024/25 | Taxable Income | UK Tax Rate |
Personal Allowance | Up to £12,570 | 0% |
Basic Rate | £12,571 to £50,270 | 20% |
Higher Rate | £50,271 to £125,140 | 40% |
Additional Rate | Over £125,140 | 45% |
According to the Independent Institute for Fiscal Studies, Scotland’s top rate of income tax may have reduced revenues for the Government, although it admitted uncertainty over the exact figure.
Tory MSP Craig Hoy said the budget will continue to make Scotland the highest taxed part of the UK. He asked Ms Robison at Holyrood: “Why hasn’t the Government listened to those who warned that Scotland’s high tax regime and high tax rates are hitting growth?
“Why didn’t the Government, rather than just tinkering with thresholds, take up the option of reversing its damaging tax increases?
“And why didn’t the minister come to this chamber and admit what everyone else in Scotland can see - that the SNP’s experiment of hitting Scotland with higher taxes has monumentally failed?”
The Finance Secretary repeated that most Scots will continue to pay less in tax than those elsewhere in the UK. Tory calls for tax cuts would mean less money for public services like the NHS, she added.
Darwin Friend, head of research of the TaxPayers’ Alliance, said: “Taxpayers across Scotland will warmly welcome the lifting of tax thresholds, even if this won’t benefit all Scots.
“But with this budget also including a dazzling array of spending pledges, there will rightly be concern about the impact of the fiscal measures on the already fragile public finances.
“Scottish ministers need to ensure that this spending binge is accompanied with meaningful reform of public services.”
MSPs will vote on the Budget proposals in February. If passed, the changes will be implemented for the start of the 2025/26 financial year on April 6, 2025.
