Shona Robison revealed significant income tax adjustments while presenting the Scottish budget.

The Scottish government has announced that higher-income earners will face increased income tax payments.

A new tax band of 45% will be implemented for individuals earning between £75,000 and £125,140, resulting in higher tax obligations for this bracket.

Moreover, the top tax rate for those earning over £125,000 will rise from 47% to 48%.

Additionally, the existing threshold for the higher tax band, set at £43,663, will remain unchanged instead of adjusting for inflation.

Finance Secretary Shona Robison confirmed these changes while introducing the government's budget for the upcoming year. The budget entails augmented funding for healthcare and local councils, aiming to counterbalance a freeze in council tax. However, there will be reductions in funding for enterprise, housing, and rural affairs.

These tax modifications will establish six income tax bands in Scotland, while the rest of the UK operates with three, leading middle and higher earners in Scotland to bear a higher tax burden compared to other regions.

The Scottish government anticipates that about 114,000 individuals will fall into the new higher tax bracket for earnings between £75,000 and £125,000. Additionally, approximately 40,000 people will be subjected to the top tax rate for incomes surpassing £125,000.

This decision aims to address a £1.5bn deficit in the Scottish budget. Robison highlighted that the increased taxes for higher earners will generate an additional £80m.

Robison also confirmed the freeze on the current thresholds for the higher and top tax bands at £43,663 and £125,140, respectively. Meanwhile, the basic and intermediate bands will adjust their starting rates in accordance with inflation.

The freeze on the higher band threshold will result in approximately 62,000 more individuals falling into the higher tax rate category of 42% or higher.

According to the Scottish Fiscal Commission (SFC), these tax adjustments are projected to bring in £1.5bn in revenue funding in the next year alone. Nevertheless, the commission's chairperson cautioned that difficult decisions might still be necessary in various government departments.

In Scotland, individuals earning over £28,850 - slightly above median earnings - already pay more income tax than they would in other parts of the UK. Conversely, those earning less than this threshold pay slightly lower taxes.

As a result of these changes, a person earning £50,000 in Scotland will pay £1,542 more annually than they would in other UK regions. For individuals earning £150,000, the additional tax burden in Scotland will amount to £6,000 per year, as estimated by the Scottish Fiscal Commission. Photo by Benjamin Brock, Wikimedia commons.