Scotland creates new ‘advanced’ income tax band

A new ‘advanced’ tax band is to be created for higher earners in Scotland, while those on top salaries will see their income tax increase.

Scotland’s finance secretary Shona Robison, who delivered her 2024-25 budget announcement this afternoon (19 December), said that from the next financial year there will be a new 45% “advanced” income tax rate for people in Scotland earning £75,001-£125,140 a year.

People earning over £125,140, who pay the top tax rate, will see their income tax rise from 47% to 48%.

The changes mean Scotland will have six income tax bands, while the rest of the UK has three.

The Scottish government estimates that 114,000 people will pay the new advanced tax rate, while about 40,000 will pay the top rate.

The current thresholds for the higher and top salary bands would be frozen instead of rising with inflation, which Robison said would generate an extra £307m through more people finding themselves in higher tax bands after being given pay rises.

Scotland is facing a £1.5bn black hole in its finances. Earlier this week, Robison said chancellor Jeremy Hunt’s Autumn Statement had been “devastating” for Scottish finances, which could mean real terms cuts to public service spending.

Robison told Holyrood: “We’re fighting Westminster austerity with one hand tied behind our back.”

Next month national insurance contributions across the UK are set to be slashed from 12% to 10%.