Setting rates of Income Tax is now the responsibility of the Scottish Parliament. To support our economy and invest in our public services against the the impact of continued UK austerity, the Scottish Government has set a new income tax policy for Scotland.
Last year, we lowered the Starter Rate of tax, froze the Basic Rate of income tax and introduced a new 19p Starter Rate of income tax to protect the lowest earners. In order to make the tax system more progressive, we introduced a new Intermediate Rate of 21p which will increase in line with inflation only and increased both Higher Rate and Top Rate by 1p respectively.
We continue to have the fairest income tax anywhere in the UK with 55 per cent of taxpayers paying less in Scotland than they would elsewhere in the UK. This year, at the same income, 99 per cent of income taxpayers will pay the same or less than last year with the Starter and Basic rate bands increasing with inflation.
Against the backdrop of austerity and a real terms reduction to the total Scottish budget, our tax system this year alone will mean we have an additional £68 million to invest in protecting our cherished public services.
By taking a different approach to the rest of the UK, we will ensure Scottish tax is more progressive and supports additional investment in our public services.
This funding will support increased investment in our hospitals, schools and businesses. It will also ensure that taxpayers in Scotland continue to get the best deal anywhere in the UK, with free medicine, free university and a transformative expansion of childcare. Read more about what’s in the budget here.