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The Scottish government has confirmed it will maintain existing income tax rates and will not introduce new tax bands in its upcoming Budget, according to Finance Secretary Shona Robison. Although tax thresholds may be adjusted, this could result in higher earners paying increased amounts in tax. Robison emphasized the goal of providing “certainty” in the financial approach following Chancellor Rachel Reeves’ recent UK Budget announcement. Reeves defended her Budget proposals, which include rises in income tax and National Insurance contributions for individuals in Scotland, describing them as “fair.”
Scotland operates a distinct income tax structure under devolved powers, featuring seven tax bands rather than the UK’s four. Robison reiterated the government’s commitment to a tax strategy that avoids altering income tax rates or creating new bands before the planned Holyrood elections in May. However, she refrained from detailing any changes to income tax thresholds. Speaking on BBC Radio Scotland Breakfast, she stated, “I’ve already set out in the tax strategy the position we wanted around stability with no changes to rates and bands. That is the position we had and that the position we maintain.”
The existing tax strategy also commits to ensuring most Scottish taxpayers pay less income tax than their counterparts elsewhere in the UK. Achieving this objective likely involves increasing the lower income tax bands by at least inflation while keeping the thresholds for higher rate bands unchanged. This approach means that as wages grow, more individuals may fall into higher tax brackets. Robison explained this policy by saying, “Well in Scotland, of course, a majority of taxpayers do pay less than in the rest of UK, and that’s a position we want to maintain. But we have asked those who earn more to pay a bit more, because we believe in that collective position that if you believe in society, then people have to make a contribution. And we believe those with the broader shoulders should make a bit more of contribution.”
The Scottish Fiscal Commission (SFC) has highlighted complexities in accurately comparing income tax payments between Scotland and the rest of the UK, cautioning against definitive conclusions. While gross figures from recent years show that most Scottish taxpayers paid more income tax than if residing elsewhere in the UK, net figures have suggested the opposite. For the fiscal year 2025-26, the SFC projects that a majority of Scots will pay less income tax than they would in other parts of the UK, based on both gross and net assessments.
Robison had previously noted that substantial income tax hikes in England could force the Scottish government to reconsider its tax plans, especially as such measures might reduce the devolved budget automatically, according to funding formulas. However, Reeves’ freeze on UK income tax and National Insurance thresholds through 2031 means this will not impact Scotland’s tax outlook for the 2026-27 Budget, which is scheduled for announcement in January. Robison described the UK Budget’s development as “chaotic” following weeks of speculation and leaks, but welcomed the return of clarity to allow adherence to Scotland’s established tax strategy.
Chancellor Rachel Reeves acknowledged that her Budget’s tax and spending policies—including modifications to cash ISAs and pension levies—would affect working individuals but defended them as equitable. The Budget has faced criticism from energy companies opposing a 78% levy on North Sea oil and gas profits, which Reeves countered by pointing to the £820 million additional funding the Budget will provide to Scotland. She justified the levy by stating, “But money always has to come from somewhere, and it is right that we ask the energy companies to make a fair contribution to fund public services in Scotland.”
At Holyrood’s First Minister’s Questions, Scottish Conservative leader Russell Findlay accused the SNP of breaking its 2021 manifesto pledge not to raise income tax, claiming Finance Secretary John Swinney “cannot be trusted” on this issue. Findlay urged the government to use savings from the scrapped two-child benefits cap—expected to free up around £120 million—to reduce income tax and allow workers to retain more of their earnings. In response, Swinney emphasized the importance of considering the wider economic environment, citing the war in Ukraine and the fallout from the controversial Liz Truss mini-budget as factors influencing fiscal decisions.
Scottish Labour leader Anas Sarwar praised the UK Budget for its significant measures aimed at reducing child poverty, describing it as “the greatest reduction in child poverty from a single budget this century,” and highlighted increases to the minimum wage. While welcoming the abolition of the two-child benefit cap, Swinney criticized the Labour government for what he described as needing to be “shamed into action” over social policy
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