Scottish Finance Secretary Shona Robison has announced that there will be no changes to income tax rates or the introduction of new tax bands in the upcoming Budget for next year. However, adjustments to the thresholds for existing tax bands may result in higher earners paying increased taxes. Robison stated her intention to provide “certainty” in response to UK Chancellor Rachel Reeves’ recent Budget announcement, which is set to increase income tax and National Insurance contributions for Scottish residents.
The Scottish government operates a distinct income tax system, featuring seven bands compared to the four bands used in the rest of the UK. Robison reiterated that the government would adhere to its tax strategy, which aims to maintain stability and avoid changes to rates or bands until after the Holyrood elections planned for May. While she did not address potential changes to income tax pay thresholds, her previous statements affirm the commitment to keep the majority of Scottish taxpayers paying less than their counterparts in the rest of the UK.
The Scottish Fiscal Commission (SFC) indicated challenges in definitively measuring tax data. It reported that in recent years, many Scots have paid more income tax than they would have elsewhere in the UK but projected that for 2025-26, a majority could end up paying less.
Robison also expressed concerns that if the Chancellor increased taxes in England, it could affect the Scottish Budget, although the recent announcements appeared to stabilize matters. The Chancellor confirmed an extension of the freeze on UK income tax and National Insurance thresholds until 2031, stating this would not impact the Scottish Budget for 2026-27. Additionally, she underscored that the ongoing UK budget process had been tumultuous, but that this moment of clarity allows Scotland to maintain its tax strategy.
Source: https://www.bbc.com/news/articles/cy0pn8xrgrdo?at_medium=RSS&at_campaign=rss