Scottish higher tax rate threshold

[Srit]

Her name changed for this, just pondering the facts rather than the politics.

One of the measure apparently being considered by new WM government is to raise the threshold at which higher income tax applies from just over 50k to 80k, in Scotland that threshold is 43.6k plus of course the higher rate of tax.

Anyone know what powers the SG have regarding the threshold? I believe there's a limit to how much the rate can be changed, but can't find anything out about the thresholds.

I'd rather see the budget focused on those who need it the most which I think that would be more beneficial for poorer students, rather than the current free for all system which results in limited places for Scottish students and is a huge benefit to the better off.

But that already happens - the Scottish Government has invested huge amounts in Widening Participation and any students entering through that route are fully financially supported. In terms of accommodation costs, in Scotland, and Glasgow in particular, it has often been the case that students remain at home. This may not seem ideal to some, but it is a cultural thing way before the changes in tuition fees between rUK and Scotland.

Like many ordinary, 'making do' Scottish families, not paying tuition fees is a huge advantage for my children, who were both still able to access their choice of course and University. I'll pay more tax for that ''til the rocks melt wi' the sun' and I am not a Scot Nat.

What does "fully financiall supported" mean? Do they get financial support with living costs over and above the current SAAS maximums?

Yes, a decent number of students remain at home but large numbers don't or can't for various reasons. And for others the need to remain at home to cope financially is limiting in terms of course and institution choice which can have a huge impact on their future.

how Do you explain this:

www.pressandjournal.co.uk/fp/opinion/4611130/scotland-university-places-capped-chris-deerin-opinion/

can also provide links to similar articles in the Herald, Scotsman and even the National.

I would think if this happens the demands for independence will reduce.

My guess is that The 10% of people on higher tax bands are less likely that average to be for independence anyway so it's impact will be small

Currently nearly 12% and predicted to hit 17% - and that could easily be an underestimate with inflation going up as fast as it is.

www.bbc.co.uk/news/uk-scotland-61667455

The level of financial support for WP students will vary and be tailored to their circumstances - for example, in rUK it may be a reduction in fees. For Scottish students it is bursaries towards living and study expenses that don't need to be repaid as well as pastoral support.

Scottish students, particularly in Glasgow as I say, have often remained at home for a number of reasons. Financial imperative may increasingly drive this, but it has always been the way that the wealthy have more choices. At least students aren't graduating under the shadow of massive tuition fee debt and as a Scot and a taxpayer that makes me very happy.

I would prefer not to pay more tax but the pain is eased if it’s well spent .
However the 3.5 billion deficit caused by poor policy decisions ( think the tens of millions wasted on B fab , Prestwick , the census and the ferry fiasco for a few ) the general inept handling of the economy for such a small country with a greater head spend than rest of UK does not make me happy . The separatists who run this country and want to break up the UK have an awful lot to answer for but they don’t get called out .

It causes friction for me because I have to listen to quite a few people who have a higher household income than us but pay significantly less tax (the way our income is split } To hear them say we shouldn't be moaning as inflations soars and add to the mix they live in a band D house which hasn't been revalued for years so got the council tax help which we didn't get in our band E house (which is worth less) If they started to say 41% tax came in on every household earning over £43k, marriage allowance transfer stopped and child benefit stopped I wonder how many would keep saying its progressive

@Teach12 home student numbers are very much capped.

Up until this year 'home' was Scottish and EU students. There's no difference between them in the allocation of fee status and they all were recorded as home for this purpose. You can't give preferential treatment to a Scottish student over say a French student.

rUK is different because they have a different fee status.

It's why many Scottish unis were in clearing for the first time this year because those rules no longer apply as a result of Brexit.
So while it has benefits, certainly if we aim to go back into the EU it is a big tax bill to educate a lot of (very good) students who on the whole don't stay or move to London

This exactly. It costs me quite a lot of money to live in Scotland as it is then on top of it I work in local government and spend half my time mopping up the shit shows that holyrood create. If we had better functioning and funded public services I’d be okay with paying more but as it is, I’m not. I’m not happy funding someone’s obsession with independence either.

Yesterdays bombshell about frozen rent is a classic example. I’m on a HA board; as a sector it means we can’t consult on a rent increase in spring; if it’s extended it will put some out of business and reduce service levels in the others, and you can forget green retrofitting which is practically unaffordable at the best of times. Meanwhile for private landlords of mortgage rates go up and they default, what happens to tenants when banks repossess?

Saying that the SG hate the housing association movement anyway. For some unknown reason.

I’ve been wondering about the tax thing too, a penny more on a pound all over plus a higher tax rate almost half of rUK will not be a good look for the economy.

Sorry not a higher tax rate a higher tax threshold, I am sure you all understood anyway

The rent freeze is an interesting one - I can see the logic to try to reduce outgoings, but it's a really big step which might have pretty significant consequences. Some private landlords will exit the market - either because rising costs which they can't offset will make it unviable or because they decide that long-term renting out property when the government will freeze rents without warning is too risky. Councils and housing associations won't be able to offset their rising costs - so maintenence and improvements will dwindle.

The housing market is screwed but forcing landlords out isn’t going to help without a plan to replace them. Many people are simply not in a position to buy and even if house prices fall a little due to reduced btl activity it probably won't make the difference for many people. Most of the people I know who rent privately aren't close to being able to buy. And parts of the country already have a huge shortage of property to let.

My husband and I also discuss this tax issue a lot. He is adamant that we could not stay in Scotland with such disparate tax rates in the uk, if Truss does increase the threshold.
as a teacher, we’re waiting to find out about salary increase which will take teachers above 43,000, which will mean we’re into the higher tax bracket. Then this percentage of 17% will increase dramatically, and the drag continues.

I do not think the services that we have here are evidence of higher tax bills. Education is a mess and I do wish all of these ‘free to all’ initiatives would stop.
it does, however, seem that the government do not want to budge on the tax brackets at all..

No, that bbc report suggested it has been a clear decision to stop indexation of the tax threshold.

I just looked at the most recent ASHE data (2021)

For all employees the 80th percentile is 41563. Current higher rate tax threshold is 43,663. So the 80th percentile would only need to go up 5% to hit the threshold. That seems likely to me to happen over the next year given inflation. If you look at full time employees only then the 70th percentile is at 40.5k. And this is 2021 numbers - they're quite probably going to mostly surpass it too in this climate.

Not well acquainted with teacher sakary structure and the current offer but I will take your word for it; I think when many people talk about the rich who pay high rate tax they wouldn't be picturing teachers.

The rent freeze idea is a primary school policy, designed to impress those with the intellect of a 10 year old. I do wish the SNP would think just a scintilla beyond the headline to what the consequences of this policy is likely to be.

Freezing rents and banning evictions sees more landlords exiting the market, reducing the number of rentals on the market and therefore driving up demand and rental prices. The ONLY way to reduce rents (and house purchase prices) is to build more.

the SNP don’t seem to think that actions have consequences.

And if the rumour is true that Liz Truss is thinking of increasing the higher rate threshold to £80k, someone earning £80k would be nearly £8k better off in England. It’s clearly a terrible policy - why the hell cut taxes when public services are in dire need - but if she does do it I wonder what Nicola will do.

So Scotland is already in a big hole because they overcooked the numbers and can't count when they introduced charging more tax here. There is a £5billion gap based on what SG "predicted" to what they get despite being warned on the numbers.

That is without the threshold changing!
I think what will happen is the UK threshold will change and NS won't budge but give us all a lecture in how it's our responsibility!

Reality is some higher payers will look to move if already in areas where its possible. The perception of its just the rich who pay that higher rate is also nonsense!
It's teachers, band 7 NHS staff (which includes some physios/nurses etc) supermarket store managers and office workers.
It's not only Dr's, solicitors, bankers or oil and gas people which many people have the perception of!

It will be interesting to see how it pans out in reality. Truss clearly has a fairly radical plan which diverges significantly from what's gone before. She's going for the low tax, attract investment, grow the economy, approach. It's a very bold move at any time and especially in the current economic climate. But in all fairness it could work.

But the potential contrast of approaches between Holyrood and Westminster could generate some interesting consequences. If Truss goes for a low tax, low spend approach then initially we should see the overall block grant drop, but the deduction for income tax should also drop (as the income tax take in rUK will fall). But if that does drive investment and incomes start to rise then income tax in rUK might well go up again, which would increase the deduction for Scotland. Which is one thing if our income tax take moves in line but what if it doesn't? If the rUK economy grows faster than Scotland we could end up worse off - with a reduced block grant and a higher deduction. Could go the other way, of course.

I suppose what I mean is you that the Truss approach is (I think, based on the various leaks and rumours!) pretty hard core. I'm not sure that it works in half measures - and the Scottish approach within it could very much be half measures. That could be detrimental to us.

I don't agree with 80K being the threshold but I also don't think given inflation and wage increases needed that 43k should be it either!

The Scottish govt has a ring fenced pot available in the independence referendum pot. I wish they would stop wasting money in court battles, votes and say well we will spend this money on people not on theoreticals and divisiveness when there has been zero shift!

It does seem like we as a nation are endlessly scrimping and saving but are told it’s for the greater good as it allows us to afford SNP wants such as baby boxes and independence papers and Gaelic signs in Edinburgh, and Scottishy censuses, and semi embassies abroad.

To hear them say we shouldn't be moaning as inflations soars and add to the mix they live in a band D house which hasn't been revalued for years so got the council tax help which we didn't get in our band E house

The council tax bandings are a joke. We're band E as well in a new build, when we lived in England a few years ago the house was band C, in an area where council tax was cheaper overall, we're paying something like double here.
The biggest joke of all is that house is worth a good 150K more than the one we're in just now.

Move council tax to a simple 0.5% - 0.7% of the current value of your house.

Sounds reasonable, but might be difficult for London etc, or older people who have had their 600k house since it cost 3k.

I think that's a good idea for the council tax. It effectively gets reevaluated every time the property sells and in the interim it goes up annually based on what is agreed by the council between nationally agreed parameters

So house bought for 200k, tax is 1%, so £2k and increases at say 2-5% a year. Then it sells 5 years later for £250k and tax is then starting at £2500.

Keeps it regularly reviewed and hopefully fairer.