Higher earning Scottish taxpayers will be subject to increased rates of income tax from 6 April 2024, as announced by the Scottish government in its Budget for 2024/25, presented to the Scottish parliament on 19 December 2023.
A new ‘advanced rate’ of 45% will be introduced for income between £75,000 and £125,140, and the top rate of tax for income above £125,140 will be increased by 1 percentage point to 48%.
The starter (19%), basic (20%), intermediate (21%) and higher (42%) rates will be unchanged. The starter and basic rate thresholds will be increased by inflation to £14,876 and £26,561 respectively but the higher rate threshold will be frozen at £43,662 (all figures here are based on individuals being in receipt of the personal allowance).
In an initial response to the Budget, the Institute for Fiscal Studies says that the increases are likely to affect the top 5% of Scottish taxpayers and could raise £82m in extra tax. A taxpayer with earnings of £125,000 will pay £5,221 more in Scotland in 2024/25 compared to the rest of the UK, while an individual earning £50,000 will pay £1,542 more. The position reverses for lower incomes, with those earning less than £29,000 paying less tax in Scotland. Advisers will also need to consider the impact of the NICs rate cuts alongside these changes, where the impact will be different in Scotland given the multiple income bands and the indexation of the starter and basic rate band thresholds.
The Scottish Budget also included the following tax proposals:
Land and buildings transaction tax: the residential LBTT rates and bands will be maintained at their current level and first-time buyer relief will continue. The additional dwelling supplement (ADS) will also continue at its current level. Legislation will be introduced to provide for various amendments to ADS, including extending timelines. The current non-residential LBTT rates and bands will also be maintained.
Scottish landfill tax: from 1 April 2024 the standard and lower rates will be increased in line with inflation to maintain parity with proposed rates for the rest of the UK.
Scottish Budget proposals are subject to confirmation by the Scottish parliament in a Scottish Rate Resolution.
Higher earning Scottish taxpayers will be subject to increased rates of income tax from 6 April 2024, as announced by the Scottish government in its Budget for 2024/25, presented to the Scottish parliament on 19 December 2023.
A new ‘advanced rate’ of 45% will be introduced for income between £75,000 and £125,140, and the top rate of tax for income above £125,140 will be increased by 1 percentage point to 48%.
The starter (19%), basic (20%), intermediate (21%) and higher (42%) rates will be unchanged. The starter and basic rate thresholds will be increased by inflation to £14,876 and £26,561 respectively but the higher rate threshold will be frozen at £43,662 (all figures here are based on individuals being in receipt of the personal allowance).
In an initial response to the Budget, the Institute for Fiscal Studies says that the increases are likely to affect the top 5% of Scottish taxpayers and could raise £82m in extra tax. A taxpayer with earnings of £125,000 will pay £5,221 more in Scotland in 2024/25 compared to the rest of the UK, while an individual earning £50,000 will pay £1,542 more. The position reverses for lower incomes, with those earning less than £29,000 paying less tax in Scotland. Advisers will also need to consider the impact of the NICs rate cuts alongside these changes, where the impact will be different in Scotland given the multiple income bands and the indexation of the starter and basic rate band thresholds.
The Scottish Budget also included the following tax proposals:
Land and buildings transaction tax: the residential LBTT rates and bands will be maintained at their current level and first-time buyer relief will continue. The additional dwelling supplement (ADS) will also continue at its current level. Legislation will be introduced to provide for various amendments to ADS, including extending timelines. The current non-residential LBTT rates and bands will also be maintained.
Scottish landfill tax: from 1 April 2024 the standard and lower rates will be increased in line with inflation to maintain parity with proposed rates for the rest of the UK.
Scottish Budget proposals are subject to confirmation by the Scottish parliament in a Scottish Rate Resolution.
