Scottish 24/25 Budget- Tax Rates Soar for Higher Scottish Earners

Finance secretary Shona Robinson delivered Scotland’s 2024/25 budget confirming tax rises for those with income in excess of £75,000.  Scottish tax rates apply to employment, pension and property income but do not apply to investment income such as interest and dividends.

The changes are designed to help plug a 1.5bn funding shortfall alongside a series of spending cuts and are estimated to raise an additional £80m in tax.

Scotland already had the highest tax rate in the UK at 47% for those with income in excess of £125,140, but today she revealed that rate of Income Tax in Scotland will be increased by 1% to 48% from 6 April 2024. This compares to UK wide rate of 45% at this level, a difference of 3% more for those living in Scotland.

Additionally, a new 45% tax band, known as the ‘advanced rate’ will be introduced from 6 April 2024 for people earning between £75,000 and £125,140, meaning they will pay 3% more tax than they currently do (effectively 5% more than rest of UK).  This means someone already in Scotland earning £100,000 will see their Income Tax liability rise by £750, but they will also be paying over £3,300 more in tax, compared to someone living in the rest of the UK.

For 2024-25 the Starter and Basic rate bands will be increased by inflation to £14,876 and £26,561 respectively however the current thresholds for the higher and top bands will be frozen at £43,663 and £125,140 respectively and will not rise with inflation.

These measures will see Scotland have six progressive income tax bands in comparison to three across the rest of the UK.

The Scottish tax rates applicable from 6 April 2024:

	Scottish Tax Bands	Scottish Tax Rate	UK Tax Bands	UK Tax Rate
Personal Allowance	£12,570	0%	£12,570	0%
Starter Rate	£12,571 – £14,876	19%
Basic Rate	£14,877 – £26,561	20%	£12,571 – £50,270	20%
Intermediate Rate	£26,562 – £43,662	21%
Higher Rate	£43,663 – £75,000	42%	50,271 – 125,140	40%
Advanced Rate	£75,001 – 125,140	45%
Top Rate	Over £124,140	48%	Over £125,140	45%

 

The changes announced have significantly increased the gap between Income Taxes paid by Scottish taxpayers compared with those in the rest of the UK.

If you would like any more information on how the changes to Scottish tax rates for the 2024/25 tax year will impact you please contact Carol Edwards, or a member of our Private Client Team.