MSE News

Scottish budget: Higher earners to pay more tax and benefits to rise by 10.1% – what the changes mean for you

Higher earners in Scotland will be hit with income tax rises from April next year, while most Scottish social security benefits will rise by 10.1% in line with inflation, deputy first minister John Swinney has announced. The changes come as part of today's Scottish budget – we round up what the new measures mean for you below.

The planned tax and benefit rises in Scotland follow the announcement of similar measures by Chancellor Jeremy Hunt in last month's Autumn Statement, which are due to take place in England, Northern Ireland and Wales next year.

See what the changes mean for your take-home pay with our updated Income tax calculator

In Scotland, income tax rates and thresholds are set by the Scottish Parliament. In England, Northern Ireland and Wales, they're set by the UK Parliament. 

The Scottish higher and top rates of tax will each rise by 1% point

From April 2023: 

  • The higher rate of income tax, which applies to incomes of £43,663 and above, will rise from its current level of 41% to 42%.

  • The top rate of income tax will increase from 46% to 47%. In addition, this top rate will apply on income of over £125,140, instead of the current £150,000.

All other income tax rates and thresholds will remain the same.

The changes mean higher earners will pay substantially more income tax from next year, as shown in the table below.

How the April 2023 changes will impact your take-home pay

Annual income How much less you'll take home (per year)
£15,000 £0
£30,000 £0
£40,000 £0
£45,000 -£13
£50,000 -£63
£60,000 -£163
£100,000 -£563
£120,000 -£863
£150,000 -£2,432
£160,000 -£2,532

See our Tax rates guide for more details on the current rates, or use our updated Income tax calculator to see the impact of the changes on your take-home pay.

The Scottish Government also announced that those buying second homes will pay more tax from 16 December 2022, as the 'additional dwelling supplement' of Scotland's land and buildings transaction tax will increase from 4% to 6%.

Most Scottish social security benefits will rise by 10.1% in line with inflation

The Scottish Government is responsible for setting and paying a number of benefits in Scotland, including the 'best start grant' for families with young children and the 'adult disability payment' for people who have a long-term illness or disability affecting their everyday life.

From April 2023, all of these benefits – with the exception of the Scottish child payment, which will stay at its increased level of £25 a week – will rise by 10.1%, in line with this September's Consumer Prices Index measure of inflation. You can see a full list of these benefits on the Social Security Scotland website.

Other benefits, including universal credit and tax credits, are administered by the UK Government. The UK Government announced last month that most of the benefits it delivers will rise by 10.1% from April 2023. See our Autumn Statement MSE News story for more info.

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