Today’s Scottish Budget saw middle and higher earners hit with an additional tax bill from next year.
Scotland’s Deputy First Minister John Swinney MSP confirmed the changes today at the Scottish Parliament.
The changes will mean higher earners paying more in tax and tax thresholds frozen for higher earners or reduced.
Among the key income tax changes:
- The higher rate of tax will go up from 41p to 42p in the £ and the additional rate will rise from 46p to 47p
- The starting rate for paying higher rate tax will be frozen for a further year at £43,662 (the starting point for higher rate tax in the rest of the UK is £50,271).
- The tax threshold for the additional higher rate will be lowered from £150,000 to £125,140
Mr Swinney said the additional money raised would be used to pay increases to public sector workers and help fund the NHS in Scotland.
The changes mean all taxpayers earning more than £43,662 in Scotland will have to pay more income tax next year.
Wealth manager and platform Hargreaves Lansdown called the Budget a “triple whammy” for middle earners and top income tax payers in Scotland, with more tax to pay plus having to deal with higher inflation and bank base rates.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, said: “Middle and higher income earners will be feeling more of the pinch in Scotland with their tax rates increasing by an extra penny in the pound.
“Instead of paying 41p in the pound for earners between £43,663 and £125,140, a 42p rate will now apply. For those at the top of the income tax tree, the income tax rate will rise from 46p to 47p, but many more taxpayers on lower branches will now have to pay the top rate. Because the top rate threshold is being lowered to £125,140 from £150,000, it means anyone above that (lower level) will have to pay 47p in the pound. This will represent a significant dent to incomes for many in the £125,140 to £150,000 bracket who will see the tax take rise by 6p in the pound in one fell swoop.”
After the tax rate and threshold change, people earning £126,000 will have to pay £992.08 more per year, she said.
Those on lower earnings will be less affected. Those who earn £45,000 a year will have to pay £13.38 more tax annually, while those earning £60,000 will have to pay £163.38 more per year.
The Scottish Government estimates that about 500,000 people in Scotland are in the higher rate tax bracket and an additional 33,000 pay the top rate of income tax.
