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Scottish Budget 2023: Income tax shake-up confirmed from April 2024 – here's what's changing

A shake-up to the rate of income tax people in Scotland pay has been confirmed in the Scottish Budget. From 6 April 2024, the threshold at which earners start paying certain rates will rise for some tax bands, while a new "advanced" rate tax band will be introduced. The "top" tax rate will also increase.

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

The Scottish changes for the 2024/25 tax year, announced by Deputy First Minister Shona Robison, come after the Chancellor Jeremy Hunt shared his Autumn Statement last month. This included cuts to national insurance  from 6 January 2024 across England, Northern Ireland and Wales (as well as Scotland).

To find out more about income tax and to check the rates for the current 2023/24 tax year, see our Tax bands guide. You can also use our Income Tax Calculator to check how the changes impact your take-home pay, though this doesn't yet include the Scottish rates for 2024/25.

Tax rates will remain the same for most in Scotland, but will rise for higher earners

The key income tax changes taking force from 6 April 2024 in Scotland are as follows:

  • The thresholds at which you start paying the "basic" (20%) and "intermediate" (21%) rates of tax will increase. This means you'll be able to earn more before you have to start paying these rates.

  • The upper thresholds on the "starter" (19%) and "basic" (20%) rate bands are also rising. This means more of your earnings will be taxed at these lower rates. The Scottish Government says the increase to these rate bands is in line with September's Consumer Prices Index (CPI) measure of inflation at 6.7%.

  • A new "advanced" tax band will be added. This will see earnings of £75,001 to £125,140 taxed at 45% for those earning over £75,000. This is an increase from the current 42% paid.

  • The "top" tax rate will increase from 47% to 48%.

All other income tax rates and thresholds will remain the same. See the table below for a full breakdown of what's changing.

Scottish income tax rates and thresholds

Income tax bands and rates 2023/24 earnings thresholds (and tax rates) 2024/25 earnings thresholds (and tax rates)
Personal allowance (for most) Between £0 and £12,570 (no income tax due)
Starter Between £12,571 and £14,732 (19%) Between £12,571 and £14,876 (19%)
Basic Between £14,733 and £25,688 (20%) Between £14,877 and £26,561 (20%)
Intermediate Between £25,689 and £43,662 (21%) Between £26,562 and £43,662 (21%)
Higher Between £43,663 and £125,140 (i) (42%) Between £43,663 and £75,000 (42%)
Advanced N/A Between £75,001 and £125,140 (i) (45%)
Top Over £125,140 (47%) Over £125,140 (48%)

(I) The personal allowance is reduced by £1 for every £2 earned over £100,000.

The Scottish Government says these changes will mainly affect those earning significantly above the median wage in Scotland, which is currently forecast to be £28,200 in 2024/25.

However, as the personal tax allowance – the amount you can earn tax-free – is frozen at £12,570 across the UK until 2028, it means more people will start to pay income tax as wages rise, which they tend to do each year. This is a process known as "fiscal drag".

Other changes announced for Scotland include increases to certain benefits

From 6 April 2024, the Scottish Government confirmed that all Scottish benefits will rise by 6.7% in line with September's CPI measure of inflation. This had previously been announced in last month's Autumn Statement, though certain benefits are devolved in Scotland.

This includes the Scottish Child Payment, a weekly payment to help towards the costs of caring for children, which will increase from 6 April 2024 from £25 to £26.70 per child under the age of 16.

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