Jeremy Hunt’s National Insurance cut will “somewhat offset” Shona Robison’s tax hike for those earning less than £112,000, according to new analysis from the Chartered Institute of Taxation (CIOT).
With Saturday marking the start of the new tax year, the measures announced by the Chancellor and the Finance Secretary in their respective budgets are due to kick in.
One of the big changes in Scotland is a new advanced income tax band, which will apply a 45% rate on annual income between £75,000 and £125,140.
An additional 1pence will be added to the top rate of tax meaning income over £125,140 will be taxed at 48%.
The starter and basic rate bands will increase in line with inflation and the Higher rate threshold will be maintained at £43,662.
READ MORE: MSPs back Scottish Government budget
That means any Scottish taxpayers earning less than £28,867 will pay less tax than taxpayers in the rest of the UK.
But the divergence for those earning more will be greater.
Those earning between £75,000 and £125,140 will pay up to £5,232 more than elsewhere in the UK.
Around 49% of taxpayers in Scotland will pay more tax than workers south of the border.
Nevertheless, according to the CIOT’s analysis, the UK Government’s decision to reduce the main Class 1 National Insurance rate paid by employees to 8% means Scots with earnings of up to £112,900 will end up paying less overall compared to their liabilities in 2023/24.
Sean Cockburn, Chair of the CIOT’s Scottish Technical Committee, said: “Although the Scottish Government’s tax choices will result in higher earning Scots paying more income tax from this month, these have been somewhat offset by the UK-wide National Insurance changes.
“It means that while Scots with earnings above £75,000 will pay more in income tax, those with earnings under £112,900 will actually end up paying less in tax and national insurance overall compared with the year just past.
“It illustrates what can happen when Scottish and UK tax choices interact with one another.”
Ms Robison said it was right that those who earn more pay more. She said Scotland had the “most progressive income tax system in the UK” and pointed to an analysis by the independent Scottish Fiscal Commission which estimates that overall income tax will raise £18.8 billion in 2024-25.
The Deputy First Minister added: “Only 5% of Scottish taxpayers will pay a higher tax rate this year compared to last year and the majority of taxpayers are still paying less than they would elsewhere in the UK.
“The money raised through income tax allows people in Scotland to benefit from a wide range of services and social security payments not provided elsewhere in the UK, including free prescriptions and free higher education.
"Council tax is less in Scotland than in England, even before factoring in a council tax freeze for 2024-25.
“I encourage everyone to check their first payslip in April to make sure their address is correct and that their tax code starts with an ‘S’. This will ensure that people are paying the right amount of tax on their income.”
READ MORE: Shona Robison cries 'betrayal' as she is stuck with housebuilding cuts
Meanwhile, Scottish Labour leader Anas Sarwar said Scottish taxpayers were “being forced to foot the bill for SNP and Tory mismanagement”.
Speaking ahead of a campaign event on Friday, he said: “Humza Yousaf is detached from reality if he thinks that 1.5 million Scots should pay more tax and oil and gas giants should pay less.
“Scotland is being failed by an SNP Government that is attempting to use income tax as a sticking plaster to cover for their woeful failure to grow our economy or manage public finances.
“Just like the Tories, the SNP is not on the side of working people."
But Scottish Conservative finance spokeswoman Liz Smith said: “Labour voted for the income tax rises we now have and praised them as ‘progressive’.
“No-one is going to be taken in by this belated conversion. The Scottish Conservatives are the only party that has consistently opposed these punitive nat taxes and are committed to scrapping them.”
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