Scottish Finance Secretary Derek Mackay has confirmed an amendment to the higher rate threshold for Scottish income tax.
Following publication of the Scottish government’s tax proposals in December, Mackay has taken steps to remove an anomaly that meant some higher rate taxpayers saw their bills fall while others on slightly lower incomes saw a rise, due in part to changes in the personal allowance.
The income bandings have been slightly adjusted. Previously the higher rate threshold was proposed to begin at £44,273, however this has now been lowered to £43,430.
All those earning above £43,430 will see a 1 per cent increase on the 2017/18 threshold, and experience a modest increase in income tax. This income tax policy will raise around £55 million and support an additional £420 million of investment in the Scottish budget.
Confirming the changes during the Stage 1 of the budget debate, Mackay said: ‘Our changes to tax ensure Scotland has a progressive tax system - with 70 per cent of taxpayers paying less next year than they do currently and 55 per cent paying less than they would across the rest of the UK - while businesses benefit from support for investment.’
Mackay added that an agreement has been reached that will see the financial plan passed at all stages by the Scottish Parliament.
The Draft Budget proposals have now been updated to reflect a 1 per cent increase in the Scottish higher rate threshold:
Budget Bill 2018-19
* Assumes individuals receive 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
