Scottish Budget hikes income tax for higher earners
The Scottish government presented its 2024/25 Budget to Holyrood yesterday. The headline changes are a move to a six-tier income tax system, and a hike for those the government deems “higher earners”. Who will these changes affect?
Income tax is a fully devolved matter in Scotland – at least in respect of the rates and thresholds that apply. The Scottish government must, however, conform to the UK personal allowance, dividend rates, NI rates and thresholds. The Budget for 2024/25 has made more changes to the income tax rates and thresholds. The current and proposed positions for 2024/25 is shown in the following tables:
2023/24
Band |
Income Range |
Rate |
---|---|---|
Starter Rate |
£12,571 - £14,732* |
19% |
Basic Rate |
£14,733 - £25,688 |
20% |
Intermediate Rate |
£25,689 - £43,662 |
21% |
Higher Rate |
£43,663 - £125,140 |
42% |
Top Rate |
Above £125,140** |
47% |
2024/25
Band |
Income Range |
Rate |
---|---|---|
Starter rate |
£12,571 – £14,876* |
19% |
Basic rate |
£14,877 - £26,561 |
20% |
Intermediate rate |
£26,562 - £43,662 |
21% |
Higher rate |
£43,663 - £75,000 |
42% |
Advanced rate |
£75,001 - £125,140 |
45% |
Top rate |
Over £125,140** |
48% |
*Assumes individuals are in receipt of the Standard UK Personal Allowance.
**Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.
As Scottish taxpayers are required to pay NI in accordance with the main UK rates, the overall position will be even more complicated. For example, higher rate taxpayers in Scotland could pay Class 1 NI at 10% or 2%, depending on whether their income exceeds £50,270 or not. Those with a mix of earned and investment income (especially dividends) will find things even more complex next year.
Related Topics
-
SPECIAL FOCUS – 2024 AUTUMN BUDGET
The first Labour budget speech since 2010 took place on 30 October 2024, with a headline figure of £40 billion in tax rises. In this special Monthly Focus we summarise all of the key announcements.
-
2024 Autumn Budget: the highlights
Today we had the first Labour budget since 2010. What are the key takeaways?
-
Tax relief for loss-making companies
You’ve decided to wind up an unsuccessful business venture. After a good start the business has made losses in the last few financial years. What tax relief, if any, can be claimed to mitigate the losses?