Scottish Income Tax Hike Expected From April 2018

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August 22nd 2018
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Scottish Income Tax Hike Expected From April 2018

Nicola Sturgeon, First Minister of Scotland, reveals four tax increase proposals.

Leader of the Scottish National Party Nicola Sturgeon revealed a Government paper proposing four methods for raising taxes in order to help Scotland meet its public services escalating cost requirements. Sturgeon hopes to raise between £80 and £290 million.

Speaking during First Minister's Questions at Holyrood she proposed four plans to increase income tax take - making full use of the devolved income tax powers provided since 2016. So far the only changes made have been to change the higher rate tax threshold, but the new plans go further. The basic outlines are below:

  1. Three Bands of Tax Remain, but increased rates.

    The higher rate and top/additional rate bands would have 1% added therefore the three bands would become 20%, 41% and 46%.

    86% of Scottish taxpayers would pay the same tax but 14% would pay more.

  2. A new tax band to slot in below the current higher rate threshold.

    The paper sets out the tax free allowance as £11,850 for the 2018-2019 tax year.

    So, after personal allowances the first band would be 0 - 12,150 taxed at 20%.

    Next would be 12,151 - 32,440 taxed at 21%.

    Next would be 32,441 - 150,000 taxed at 41%.

    Finally above 150,000 taxed at 48% or 50% (a separate proposal).

    50% of Scottish taxpayers would pay the same tax but 50% would pay more.

  3. A five band tax system

    The paper sets out the tax free allowance as £11,850 for the 2018-2019 tax year.

    So, after personal allowances the first band would be 0 - 12,150 taxed at 20%.

    Next would be 12,151 - 32,440 taxed at 21%.

    Next would be 32,441 - 63,150 taxed at 41%.

    Next would be 63,151 - 150,000 taxed at 42%.

    Finally above 150,000 taxed at 50%.

    50% of Scottish taxpayers would pay the same tax but 50% would pay more.

  4. A six band tax system

    The paper sets out the tax free allowance as £11,850 for the 2018-2019 tax year.

    So, after personal allowances the first band would be 0 - 3,150 taxed at 19%.

    Next would be 3,151 - 12,150 taxed at 20%.

    Next would be 12,151 - 32,440 taxed at 21%.

    Next would be 32,441 - 63,150 taxed at 41%.

    Next would be 63,151 - 150,000 taxed at 42%.

    Finally above 150,000 taxed at 50%.

    57% of Scottish taxpayers would pay the less tax but 43% would pay more.

44 percent of the Scottish working population (2 million people) do not pay any income tax as they earn below the personal allowance threshold, but any person earning over £24,000 gross will pay more tax. This can range from £260 to £810 more per year. UK non-Scotland resident taxpayers will pay less tax from a gross income of £31,000 up compared to Scotland resident taxpayers.

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