Scottish Budget 2019 : Income Tax

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November 12th 2019
Tax Week 32
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Scottish Budget 2019 : Income Tax

Derek Mackay to announce draft Budget today. Are fears of tax rate rises for middle incomes warranted?

Updated

Our tools and calculators are now updated to include the changes announced for 2019. All bands increase by inflation aside from the higher rate, which is frozen to the same level as last year - once the new increased £12,500 personal allowance is taken into account. To calculate under Scottish rules, make sure you select Scotland as the tax region.

Tax rates for 2019 are published here.

Finance Secretary Derek Mackay is set to deliver his Annual Budget Statement to the Scottish Parliament today (Wednesday 12 December) at around 3:25pm.

He is attempting to make the tax in Scotland more progressive in order to take more tax from higher incomes, but without crossing the boundary where people at the upper earning scales start looking for and using methods to evade paying tax they deem excessive.

Rates set last year were drastically different to before, taking full advantage of devolved powers to alter and create new bands for income tax. At the time they set to achieve the progressive tax agenda with people from middle earners up paying more tax than before and more than their rUK (Rest of UK) equivalents.

These tax changes are now even more drastic in light of UK Chancellor Philip Hammond's latest Budget where big tax cuts have been brought forward and the higher rate threshold now raised to £37,500 - over £6,000 north of Scotland's.

The normal Scottish Budget pot is around £33 billion. Scotland has received an additional £1.6 billion in funding from the UK government over last year in part of Philip Hammond's spending splurge and there is hope that a combination of this and the gap between rUK and Scottish tax rates will mean no further tax increases announced in the Scottish Budget.

Mackay has previously said their is scope to raise tax on the Scottish middle earners. If he matches the rate changes made south of the border and reduces taxes it could cost him around £300 million.

The draft budget is announced tomorrow and we will update our Scottish calculations once figures are revealed. You can select Scottish tax rules by clicking the Scottish flag and the top of the website or setting your tax region as 'SCT' in the apps.

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