Income tax rates have been frozen for the rest of this Parliament
and more of people's money will be taxed at the starter and basic
rates.
Finance Secretary set out the decisions as part
of the 2025-26 Scottish Budget, as she also published Scotland's
Tax Strategy.
The Finance Secretary also committed to freezing the number of
tax bands, providing certainty to taxpayers and businesses.
As a result, more than half of taxpayers pay less than they would
elsewhere in the UK and the Strategy commits to this being
maintained for the remainder of this Parliament.
In 2025-26, Income Tax proposals will see:
- the Basic rate and Intermediate rate thresholds increase by
3.5%, effectively twice the rate of inflation, to £15,397 and
£27,491 respectively
- the Higher, Advanced and Top rate thresholds will be
maintained at £43,662, £75,000 and £125,140 respectively
The Finance Secretary said:
“I have decided to provide tax support for low and medium-income
earners.
“The Basic and Intermediate rate thresholds will increase this
year by 3.5%, effectively twice the rate of inflation.
“That means more of people's money will be taxed at the starter
and basic rates.
“It also means that the majority of taxpayers in Scotland will
continue to pay less income tax than in the rest of the UK. This
will remain true until at least the end of this Parliament while,
as with the UK, thresholds for Higher, Advanced and Top rates
will be maintained at their current levels.
“Overall, the income tax decisions we have taken since devolution
have delivered up to £1.7 billion more in 2025-26 than if we had
followed UK Government policies.
“Setting out our plans now for the rest of this parliament will
provide certainty, allowing taxpayers to better manage their
finances and businesses to plan and make investment decisions
with confidence.”
Background
Scotland's Tax Strategy:
Building on our Tax Principles - gov.scot sets out the
Scottish Government's medium-term ambitions for how the tax
system should develop to support the delivery of government
priorities.
The Scottish Fiscal Commission forecast that Income Tax will
raise £20.5 billion in 2025-26, an increase of 3% compared to
their most recent forecast in December 2023.
Scottish Budget 2025 to
2026 - gov.scot
