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New income tax band to provide additional revenue for public services in Scotland

By David Porter

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The Scottish Government has unveiled a £6.3 billion investment in social security and more than £19.5 billion for health and social care at the heart of the Scottish Budget for next year.

Amongst the proposals are a new income tax band for Scotland which will raise additional revenue Deputy First Minister and Finance Secretary Shona Robison has announced.

The Advanced rate band will apply a 45 per cent tax rate on annual income between £75,000 and £125,140.

Other changes include an additional 1p being added to the Top rate of tax and the Starter and Basic rate bands increasing in line with inflation. There are no changes to the Starter, Basic, Intermediate and Higher tax rates.

The Higher rate threshold will be maintained at £43,662.

The Scottish Fiscal Commission estimates that overall Income Tax will raise £18.8 billion in 2024-25.

The Commission also estimates that next year the Scottish Government will raise around £1.5 billion more in income tax revenue than if it had followed the Income Tax policy of the UK Government, as a result of changes to rates and bands it has brought in since 2017-18.

The Finance Secretary also announced plans to -

Freeze the non-domestic rates poundage at 49.8 pence, delivering the lowest poundage rate in the UK for the sixth year in a row.

The Intermediate Property Rate and Higher Property Rate will rise in line with inflation to 54.5 pence and 55.9 pence respectively

Offer 100 per cent rates relief for hospitality businesses in island communities, capped at £110,000 per business

Maintain existing Land and Buildings Transaction Tax (LBTT) rates and bands at their current levels. Relief allowing first-time buyers to claim a reduction in the amount of LBTT they need to pay will continue

Increase the standard and lower rates of Scottish Landfill Tax to continue to support Scotland’s circular economy ambitions, while ensuring these do not encourage cross-border movement of waste

Shona Robison
Shona Robison

Ms Robison said: “Managing the cumulative impacts of the UK Government’s disastrous Autumn Statement, high inflation and ongoing economic damage from Brexit means we have had to make difficult choices and prioritise support for those who need it the most.

“We are proud that Scotland has the most progressive Income Tax system in the UK, protecting those who earn less and asking those who earn more to contribute more.

"This in turn allows us to provide a more comprehensive set of services than in the rest of the UK.

“These targeted tax decisions are expected to increase our Income Tax revenue by £389m and have been carefully balanced with the needs of individuals, businesses and the wider economy, while ensuring we continue to build upon our progressive approach to taxation.

“Our decisions on tax in this budget – including both Income Tax policy changes and the freeze in Council Tax – provide a net benefit to around 60 per cent of Scottish households, with around 80 per cent of households paying no more tax as a result of these measures.

“On non-domestic rates, the support I have outlined for businesses is estimated to be worth £685 million this year and ensures that over 95 per cent of non-domestic properties continue to be liable for a lower property tax rate than anywhere else in the UK.”


The Scottish Income Tax bands and rates proposed in the 2024-25 Budget are:

Starter £12,571 - £14,876 - 19 per cent.

Basic £14,877 - £26,561 - 20 per cent .

Intermediate - £26,562 - £43,662 - 21 per cent .

Higher £43,663 - £75,000 - 42 per cent .

Advanced - £75,001 - £125,140 - 45 per cent .

Top Above £125,140 - 48 per cent .

Under the UK Government’s Personal Allowance policy, those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

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