The Scottish government has announced that higher earners will be paying more income tax. Finance Secretary Shona Robison confirmed that a new 45% tax bracket would be introduced for individuals earning between £75,000 and £125,140, meaning they will pay more tax than before. In addition, the top tax rate for those earning over £125,000 will rise from 47% to 48%. The announcement came as the Scottish government revealed its budget for next year.
According to Ms. Robison, the tax changes are designed to help address a £1.5bn funding shortfall in the Scottish budget. The Scottish government has estimated that around 114,000 people will be affected by the new tax rate, while approximately 40,000 will have to pay the higher rate. The changes mean that Scotland now has six income tax brackets, in contrast to the UK, which has three.
The finance secretary also confirmed that the current thresholds for the higher and top bands, which currently stand at £43,663 and £125,140, would be frozen instead of rising with inflation. This move is expected to generate extra revenue of £307m.
The Scottish government has estimated that the new tax changes will raise an additional £80m. Ms. Robison also announced that an extra £140m in funding would be given to local authorities to help finance a council tax freeze. Other major announcements in the budget include an increase in funding for NHS boards by £550m and a rise in the Scottish Child Payment to £26.70 from April of next year.
Despite the announcement, critics have pointed out that Scotland is already the highest taxed part of the UK. Prime Minister Rishi Sunak warned against raising taxes ahead of the budget, stating that Scotland was receiving a record amount of funding from the UK government via the Barnett formula
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