The Scottish Government is set to row back on plans for tax hikes earner following the SNP’s drubbing at the Rutherglen and Hamilton West by-election, according to reports.

Earlier this year, Humza Yousaf told his finance secretary to ensure Scotland’s tax system was “the most progressive in the UK.”

However, with his party losing ground to Labour in the polls, the First Minister is looking at shifting away from policies that could hit the pockets of the middle-class.

It comes after Mr Yousaf used his SNP conference to announce a shock council tax freeze for the next year.

READ MORE: Council leaders reject and 'deplore' Humza Yousaf's tax freeze plan

Asked about the prospect of income tax rises in December’s budget, one senior party figure told the Sunday Times: “It’s not going to happen.”

A senior SNP source said: “If we can get to a position where we are not raising income tax then everyone would welcome that. I think that would be everyone’s aspiration.”

Mr Yousaf's initial instruction to Shona Robison came in a “mandate letter” when he set out his Programme For Government.

In it, the First Minister said the Finance Secretary had agreed the 2024/25 Scottish budget would be underpinned by tax measures which improved “fiscal sustainability”.

He said she would “use our tax powers in the setting of the 2024/25 Budget to further progress delivery of the most progressive tax system in the UK by making tax policy choices that are informed by public and stakeholder views”.

During the SNP leadership contest, Mr Yousaf said he was attracted to an STUC proposal for a new 44p income tax band on income between £75,000 and £125,140, raising £200million a year.

However, the Sunday Times reports that there are fears that further tax rises could change the behaviour of workers earning up to £50,000, stopping them spending money on products such as white goods and home renovations.

“If you take a stuffing in a by-election and you don’t change course, you deserve everything you get,” one source said.

“The fact that Humza has been quick to do that is to his credit. He cut to the chase and got to the point. The Tories lost two by-elections and are on the TV pretending nothing is wrong, with their fingers in their ears. We are nowhere near them in terms of problems but we made the change quickly.”

READ MORE: Brian Taylor: SNP may freeze income tax rises

One insider told The Herald's Brian Taylor that the Government accepted that they had “lost the narrative” and were seen as more focused on recycling and gender recognition reform than the cost of living.

The Sunday Times also reports that plans to axe gas boilers in existing homes and replace them with heat pumps may be diluted as part of this change in tack.