Shona Robison presents her Scottish Budget at Holyrood on Tuesday. Photo: SST/Alamy Live News
Higher income people in Scotland face paying more than £5,000 more in income tax next year than if they lived in England after Humza Yousaf's government introduced a new rate in 45 pence as part of the triple increase.
Shona Robison, the SNP finance minister, used the Scottish Budget to announce a new “advanced” tax rate for people on higher incomes, which will apply to incomes between £75,000 and £125,140 from April next year.
< p>This means Scotland. will have six income tax bands, double the three south of the border, prompting warnings of a brain drain of top talent to England.
The Chartered Institute of Taxation (CIOT) has warned that around 114,000 Scots this year The group will pay £1,871.13 more in income tax next year and £5,231.81 more than someone on the same salary in other parts of the UK.
Those with income between £100,000 and £125,140 will pay an effective rate of 67.5% on this portion as the tax-free personal allowance is scrapped. When national insurance is taken into account, this figure rises to 69.5%.
Ms Robison also increased Scotland's top tax rate by 1p to 48p, affecting 40,000 workers earning more than £125,140. That's 3p a pound above the top rate south of the border.
In its biggest tax grab, it introduced a hidden tax of £307 million, freezing the wage threshold for the higher rate at 42p at £43,663, rather than increasing it due to inflation.
This move will also impact average income. workers such as teachers, police officers and NHS staff due to the “fiscal burden”. This means more Scots will be forced to pay the higher rate when they receive their annual pay rise. Those already earning more than £43,663 will also see their tax bills rise.
The rise also means the cross-border tax gap between Scotland and England widens further, with a person earning £100,000 paying £3,346 more than if they lived south of the border. Anyone earning £28,867 will pay more in Scotland.
The Scottish Fiscal Commission, which provides official forecasts to SNP ministers, estimates that workers will pay an extra £1.5 billion in income tax next year compared to what would be levied in the rest of the UK.
But the new tax band will only raise £74 million and the top rate will increase by 1p on £8 million. Projected income from the two increases has been cut by £118 million due to changing behavior among people on higher incomes wanting to avoid them.
This could include passing up a promotion, reducing your working hours, or receiving lower-tax dividends. UK government rate.
For thousands of Scots, these changes will reverse the impact of the Chancellor's decision to cut National Insurance from January 6th. UK.
Rishi Sunak warned Mr Yousaf, the First Minister, on Monday that the income tax rise is again damaging the UK Government's efforts to help families and businesses amid the cost of living crisis, arguing “we should be cutting taxes, not raising them”.
But Ms Robison told MPs the chancellor's autumn statement “prioritised cutting taxes at the expense of public services”, adding: “This cannot be right.”
Announcing the income tax changes, she said: “We are proud that Scotland has the most progressive income tax system in the UK, protecting those who earn less and asking those who earn more to contribute more. This in turn allows us to provide a more comprehensive range of services than the rest of the UK.
“These targeted tax decisions are expected to increase our income tax revenue by £389 million and will be carefully balanced with the needs of individuals, businesses and the wider economy, while ensuring we continue to develop our progressive approach to tax.”< /p> 
Shona Robison with Humza Yousaf, the first minister Rishi Sunak warned against raising taxes. Photo: Andrew Milligan/PA < p>But Tracey Black, director of CBI Scotland, said: “The decision to introduce an advanced rate of tax will damage Scotland's ability to attract highly skilled workers and our competitiveness nationally and internationally.”
Bruce Cartwright, chief executive of the Institute of Chartered Accountants of Scotland, said the Scottish Budget was “short-sighted and fails to deliver sustainable economic growth.”
He added: “Further implementation” Increased taxes for people in higher income brackets income is not a long-term sustainable solution and will have a negative impact on Scotland's positioning as an attractive place to live and do business.
“Scotland already has the five highest tax bands in the UK and these changes will impact growth in the Scottish economy, although they will cover only 5.4 per cent of the budget deficit.”
CIOT has warned that the cross-border gap taxes could rise further if the Chancellor announces income tax cuts for the rest of the UK in his expected March Budget.
Sean Cockburn, chairman of the Scottish Technical Committee, said: “The Scottish Government's plans for income tax are widening the divergence between people on higher incomes in Scotland and the rest of the UK, and we cannot rule out the possibility that the divergence could widen further in the spring.” /p>
“A sixth income tax band will inevitably mean further complications for affected taxpayers. This may include difficulty understanding when different income tax rates apply and how to ensure the appropriate amount of tax relief is applied to things like gift aid and pension contributions.”
“A chaotic budget from an incompetent government”
The personal allowance of £12,570 (the amount workers can earn before they start paying income tax) is the same across the UK. A starting rate of 19 per cent will be levied in Scotland next year on earnings up to £14,876, after which a base rate of 20 per cent will come into force for salaries up to £26,561.
Ms Robison said It said both thresholds had increased by inflation compared to this year, but an economist at the Fraser Allander Institute said they had risen by only one percent and 3.4 percent respectively.
Joao Sousa, the institute's director, said this would mean that “fiscal headwinds continue to force people to pay more taxes than before.”
Earnings up to pounds sterling will be charged an interim rate of 21 per cent. 43,662, before the higher rate of 42 per cent applies to salaries between £43,663 and £125,140. By comparison, in the rest of the UK the higher rate is 40 per cent and starts at a salary of £50,271. A new increased rate of 45 pence and a top rate of 48 pence will be levied in Scotland on top of this amount.
Ms Robison said she would give £140 million to local authorities to freeze council taxes – the same the amount they would receive. raised by a five per cent tax increase.
Michael Marra, Scottish Labour's finance spokesman, said: “This is a chaotic budget from an incompetent government that will force ordinary Scots to pay more and get less in return.” . This government's failure for 16 years to focus on the priorities of country rather than party means they are now asking taxpayers to bail them out.”
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