Thousands more taxpayers moved to Scotland than left each year in
the period after Scottish Income Tax was brought in, new HMRC
research has found.
The study shows that Scotland is an attractive place to live and
work, with a progressive approach to tax that raises additional
funding for public services, Deputy First Minister said.
The study, looking at movement within the UK over 12 years, found
a steady increase in net migration of taxpayers in the five years
from when the tax was launched in 2017-18. On average during that
period, almost 4,200 more taxpayers moved to Scotland than left
each year.
In 2021-22 alone – the latest year of available data – £200
million in additional taxable income was brought into Scotland,
with more Higher and Top rate taxpayers moving to Scotland than
leaving.
The research is one of two studies commissioned by the Scottish
and Welsh Governments to help better understand potential
behaviour changes that might be brought about as a result of
changes to income tax policies. Provisional findings were shared
with Ministers ahead of setting the 2024-25 Scottish Budget.
The Deputy First Minister said:
“We welcome this research, showing a steady increase in net
taxpayer migration in the years after Scottish Income Tax was
introduced. The latest figures show that across all tax bands and
almost all age ranges in 2021-22, more taxpayers chose Scotland
as their home than left – offering yet more proof that Scotland
is an attractive place for people to live and work, while our
progressive approach to income tax asks those who earn more to
contribute some more.
“We know people base the decision on where to live on a range of
factors, and by coming to Scotland they have access to a range of
services and benefits not available elsewhere in the UK,
including free tuition and prescriptions. Scotland has the most
generous childcare package for three and four year olds, and
council tax is lower here than in England.
“This social contract with the people of Scotland is funded in
part by our progressive income tax system. Indeed, in 2021-22
some £200 million in taxable income was brought here as a result
of inward migration in a single year, increasing economic
activity while helping fund vital public services like our NHS
and our efforts to tackle child poverty.”
Background
Labour market participation and
intra-UK migration of taxpayers - GOV.UK (www.gov.uk)
HMRC has built a new longitudinal dataset covering the incomes
and location of UK taxpayers over a twelve-year period. This
dataset was used to look at the trends in the number of
individuals moving between Scotland and other parts of the UK and
between Wales and other parts of the UK, between the 2010-11 and
2021-22 tax years, the latest year for which outturn data is
available.
HMRC has also published a paper estimating changes in labour
market participation and intra-UK cross-border migration
following the 2018-19 Scottish Income Tax changes.
