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Scottish Budget: Higher earners to pay more income tax
21st December 2023
Higher earners in Scotland are to pay more income tax, the Scottish government has announced. A new 45% band will be introduced for people earning between £75,000 and £125,140 - meaning they will pay more tax than they currently do. The top rate of tax, paid by those earning more than £125,000, will also rise from 47% to 48%.
Finance Secretary Shona Robison confirmed the move as she unveiled the government's budget for next year. While spending on health and social affairs increase, it included cuts to enterprise funding, housing and rural affairs. The tax changes mean Scotland will have six income tax bands while the rest of the UK has three, with higher earners in Scotland paying more than other parts of the country.
The Scottish government estimates that 114,000 people will pay the new advanced tax rate for those earning between £75,000 and £125,000, with a further 40,000 people paying the top rate for those earning more than £125,000.
Commenting on the Scottish Budget, Dr Liz Cameron CBE, Chief Executive, Scottish Chambers of Commerce, said:
“We wanted to see a Scottish Government Budget that prioritised investment and business support. Instead, many sectors in the business community will feel neglected and disappointed. We recognise that today’s budget was made under significant strain on the public finances but today’s choices will leave many questioning the future outlook of the economy.”
On Income Tax, Dr Cameron said:
“The introduction of a new tax band for higher earning employees is a blow to Scotland’s attractiveness and places the personal tax system at a further competitive disadvantage compared to the rest of the UK.
“At a time when industry is dealing with a tightening labour market supply and skills shortages, further tax divergence will impact our ability to attract and retain the talent that business needs. We are concerned about the likely impact this will have on consumer spending and deterring potential talent from thinking about living and working in Scotland.”