If income tax is risen in the Budget, will the higher Scottish rate of tax still apply?

[GreatWhiteWail]

Does anyone know what would happen in respect of the additional tax that are paid in Scotland by people who if the income tax increases, that are reported to be coming, comes in? Will the Westminster increase be absorbed into what extra is already paid, or does the additional Scottish rate automatically get applied on top of whatever increase Westminster applies and we'll be paying even more again?

Not sure whose tax rise dictates the other, or if an increase in rUK would automatically mean an adjustment in Scotland of the extra.

(For the non-Scotland-resident MNers seeing this, in Scotland you pay higher rates of income tax if you earn upwards of £30k, but especially by those earning £50k (£1.5k extra) and up where it's several thousands extra in tax each year compared to rUK)

As far as I’m aware, Scottish taxes are independent of Westminster so an increase in tax in England won’t affect us right now.

However, a Westminster tax increase will put pressure on Scotland to increase our taxes too at some time.

I'm not sure about this. Could be Scottish extra rate is on top of the rest of UK rate. Off to Google!

That’s always been my understanding, hence the S in your tax code

Looks like we are separate but can't see Scottish government not following suit.
But dividend and savings income you pay English rates and earned income you pay Scottish rates.

If Westminster raise income taxes then ours in Scotland are unaffected. Our tax rates are higher and thresholds lower so we pay more income tax in Scotland unless you earn less than £30k and then you are around £28 better off

So does this mean that some of the increase in Westminster take rates will actually be absorbed into the extra we already pay? If I'm understanding the above about UK rises not affecting Scotland.

So if UK increases by 1% above £40k (just an example), but Scottish people are already paying that 1% extra above £30k, we'll notice less of an increase as we were already paying most of it anyway?

I thought John Swinney had said there would be no increase but there is a Scottish Budget in January so I guess they will announce it then. I think any increases would start from 6 April 2026.

GreatWhiteWail · Today 16:27
So does this mean that some of the increase in Westminster take rates will actually be absorbed into the extra we already pay? If I'm understanding the above about UK rises not affecting Scotland.
So if UK increases by 1% above £40k (just an example), but Scottish people are already paying that 1% extra above £30k, we'll notice less of an increase as we were already paying most of it anyway?

The 2 systems are entirely separate. If Westminster increases tax, this will not affect us. The tax we pay won’t change at all.

This is what I’d heard. He doesn’t want to increase it any more just before a budget.

The devolved governments are allowed to vary income tax rates but have to keep it within a certain %tags of the UK rates.

rUK will get more income because of the increased tax take. Scotland won’t have income tax increases so won’t get any extra funding.

Thats my understanding anyway.

There's rumours of a 2p rise in income tax in RUk, offset by a reduction of 2p in NICS. If that happened, and Scotland kept their tax as it is, then Scots would benefit from the 2p NICS reduction as that's not devolved. However, the income tax change from Westminster would create a reduction in the block grant to Scotland, equating to around £1bn over 5 years, so Scotgov would need to decide how to deal with a cut in the block grant.

I doubt they will raised income tax before the election. It might be more of a concern this time next year.

Income tax isn’t a fully devolved tax. It is collected by HMRC from the whole of the UK and then sent back to Scotland as part of the block grant (Barnett formula). This includes a “top up” of money collected through the higher rates of Scottish income tax.

If Westminster raises taxes, then this will impact the block grant through the Barnett formula, which is used to fund things like the NHS and education.

But it means the “top up” will then be smaller.

It will be up to Holyrood how they then spend the block grant and the “top up”, but the choices would be:

(1) spend less than England does on NHS/education etc
(2) make cuts to Scottish specific policies (eg tuition fees, baby boxes etc) or
(3) raise Scottish top up taxes

I think there’s a limit to how much more we higher rate taxpayers are prepared to pay.

Top up taxes aren’t exclusively aimed at higher rate tax payers. They could increase the basic rate of tax.

And there’s not a whole lot anyone can do about it, unless you’re prepared to move to England

I’m prepared to move to England if they increase the higher rates. The Scottish government doesn’t seem to understand how tax works. The Greens upped the rate for those earning £75-125k to 45% because they thought it was reasonable, showing they didn’t understand about the personal allowance withdrawal which adds 20% to any tax paid between £100-125k. So that’s 65% tax on these people. And 2% NIC. And if you have student loans a further 9% tax. 76% tax anyone? Crazy. Just so greedy.

If tax increased by 2% with the same reduction in national insurance as rumoured, it would correct somewhat a blip in the system where Scottish higher earners pay 42% tax plus 8% ni on earnings between 43 and 50k.
so only 48% tax instead of 50.

See BBC News Scotland website for latest 04/11/25. Unable to link.
Shona Robison is quoted in the article.

Scottish elections are coming soon.
I reckon the SNP will crow about nasty Westminster and their tax hikes and make no changes until after that.

This. A 2p rise in income tax in the rest of the UK will create a hole in the Scottish budget which will need to be filled somehow. Massive headache for the SNP and I can’t see how they will be able to balance the budget without raising taxes here as well.