Scottish Budget 2024: Income Tax and benefits changes confirmed – here's what they mean for you

The changes in Scotland come after the Chancellor Rachel Reeves shared her Autumn Budget in October.

Income Tax thresholds will rise for most in Scotland

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.

Some of the thresholds will change from 6 April 2025 – we've highlighted these in bold in the table below:

The changes mean that more of your earnings will be taxed at the lower rates. However, it's important to note that, because most of the thresholds have been frozen, you may still end up paying more tax overall. This is due to a process known in economic jargon as "fiscal drag".

Here's MoneySavingExpert.com founder Martin Lewis to explain what this means in practice: "What freezing the threshold does is that it means no matter what you earn, as your earnings increase, a bigger proportion of your earnings goes on tax. And that's how the Chancellor [or Government] makes money from it."

The Scottish Government said it would not increase the rates of Income Tax – or introduce any new bands – until the end of this Parliament, which is not expected until August 2029. It has also committed to raising the upper thresholds on the starter and basic bands at least in line with inflation for this period.

Those buying a second home will pay more Stamp Duty

Stamp Duty on second homes and additional properties in Scotland, known officially as the "Additional Dwelling Supplement" is rising from Thursday 5 December:

Tuition fees remain free for Scottish students – but they'll rise if you're coming to study from elsewhere in the UK

Though this wasn't announced as part of the Budget, the Scottish Government has confirmed that the amount Scottish universities will be able to charge students from England, Northern Ireland and Wales will rise to £9,535 a year (in line with the increase in England).

This rise is based on a prediction for the measure of inflation known as the 'Retail Prices Index excluding mortgage interest payments' (RPIX) for the middle of that academic year.

However, tuition will remain free for students from Scotland studying at Scottish universities. If you choose to study elsewhere in the UK, you'll be able to take out a student loan of up to £9,535 a year to cover your tuition fee.

The Scottish Government has yet to confirm whether it'll increase support towards students' living costs, also known as maintenance loans.

On Carer Support Payment or Carer's Allowance? You'll be able to earn £45 more a week before losing the benefit

The Carer Support Payment replaced Carer's Allowance in Scotland as the main benefit available for unpaid carers, though some are still getting Carer's Allowance.

If you're claiming either of these, the amount that you can earn while still receiving the benefit will increase from £151 a week to £196 a week from April 2025. This is in line with the increase to the earnings limit in England and Wales as announced in the Autumn Budget.

However, both the Carer Support Payment and Carer's Allowance still have a "cliff-edge", meaning that if you earn a penny over the limit, you lose your entitlement completely. To read more about our campaign on this issue, see our Carer's Allowance warning.

A new Winter Fuel Payment will be introduced and the two-child benefits cap will be reviewed

A new version of the Winter Fuel Payment, called the Pension Age Winter Heating Payment, will be introduced for winter 2025/26 for ALL Scottish pensioners.

Households with a pensioner receiving qualifying benefits will get either £200 or £300 depending on their age. All other households with a pensioner will receive £100.

In addition, the Scottish Government has said it will "develop the systems necessary" to scrap the two-child benefits cap in 2026. This is currently a UK-wide policy that prevents parents from being able to claim extra Universal Credit or Child Tax Credit for three or more children.

In general, benefits in Scotland will be uprated from April 2025 in line with September 2024's Consumer Prices Index (CPI) rate of inflation, at 1.7%.