Scottish Budget 2023: Income tax shake-up confirmed from April 2024 – here's what's changing

MSE_Molly_G

A shake-up to the rate of income tax people in Scotland pay has been confirmed in the Scottish Budget. From 6 April 2024, the threshold at which earners start paying certain rates will rise for some tax bands, while a new "advanced" rate tax band will be introduced.

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Scottish Budget 2023: Income tax shake-up confirmed from April 2024 – here's what's changing

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EdSwippet

From: Scottish income tax 2024-25 - What might you be paying? - BBC

Although the highest headline rate at this income level is the new advanced rate of 45%, the marginal rate of income tax for incomes between £100,000 and £125,140 is 67.5% (69.5% including national insurance) due to the effects of the tapering of the personal allowance.

Ouch.

sheslookinhot

[Deleted User] said:

Shocking!!!

I would move south!!

That might end up costing you more. 

Most of the increase are on higher rate tax payers and will increase funding to our NHS. Hard to argue about that.

sheslookinhot

EdSwippet said:

From: Scottish income tax 2024-25 - What might you be paying? - BBC

Although the highest headline rate at this income level is the new advanced rate of 45%, the marginal rate of income tax for incomes between £100,000 and £125,140 is 67.5% (69.5% including national insurance) due to the effects of the tapering of the personal allowance.

Ouch.

BBC get it wrong again.  Income tax for higher earners, up to £75,000 is remains at 42%, not 43%.

kjs31

[Deleted User] said:

Shocking!!!

I would move south!!

I did! Moved back to England in 2022 and got an immediate tax rebate as you can only pay tax in either England or Scotland for a tax year so I got my 5 months of additional Scottish tax refunded. Since then I’ve paid £££ less in tax and stand to save even more next year. Still do the same job, just from a different office (UK wide company). No regrets! 

If anyone does want to move to England ensure that you do it less than 6 months into the tax year otherwise you will pay Scottish tax for the full tax year. And ensure that you tell HMRC about your address change. 

booneruk

sheslookinhot said:

Most of the increase are on higher rate tax payers and will increase funding to our NHS. Hard to argue about that.

Really? I've read that the money raised will be a tiny contribution towards filling a massive black hole

molerat

booneruk said:

sheslookinhot said:

Most of the increase are on higher rate tax payers and will increase funding to our NHS. Hard to argue about that.

Really? I've read that the money raised will be a tiny contribution towards filling a massive black hole

Probably be spent chasing pointless court cases and funding their one and only real policy !

kjs31

sheslookinhot said:

That might end up costing you more. 

Most of the increase are on higher rate tax payers and will increase funding to our NHS. Hard to argue about that.

Except that decent doctors will pay £££ more tax in Scotland so it might not be that attractive to live there. In the 23/24 tax year someone earning 100k pays £2611 more in tax than someone in England and in 2024/25 it will be £3346 more. Hardly an incentive to attract top talent. 

T_bomb

Just don't bother earning between £100k and 125k ! (Either use your pension to cap your income at £100k or make sure you're busting well through that death band - 70% tax and NI (it's the personal allowance taper)!

norsefox

booneruk said:

sheslookinhot said:

Most of the increase are on higher rate tax payers and will increase funding to our NHS. Hard to argue about that.

Really? I've read that the money raised will be a tiny contribution towards filling a massive black hole

The estimate is that a significant amount of the increase will be lost due to behavioural changes from those affected - particularly those in the £100k - £125k tax band.  Though Scotland's is absurd, the rUK's isn't much better.

The lost personal allowance band needs to be removed and replaced with something else entirely - either a new tapered value (e.g. start England's 45p rate at £100k or earlier, and/or increase the rate at £125k/£150k)

The messaging is difficult, as it is ostensibly a tax cut, but the reality is the effect of the tapering is hugely mitigated already.  Many governments have failed to address it, and have knowingly produced a market for new bikes, electric vehicles, and higher pension contributions.

[Deleted User]

norsefox said:

booneruk said:

sheslookinhot said:

Most of the increase are on higher rate tax payers and will increase funding to our NHS. Hard to argue about that.

Really? I've read that the money raised will be a tiny contribution towards filling a massive black hole

The estimate is that a significant amount of the increase will be lost due to behavioural changes from those affected - particularly those in the £100k - £125k tax band.  Though Scotland's is absurd, the rUK's isn't much better.

The lost personal allowance band needs to be removed and replaced with something else entirely - either a new tapered value (e.g. start England's 45p rate at £100k or earlier, and/or increase the rate at £125k/£150k)

The messaging is difficult, as it is ostensibly a tax cut, but the reality is the effect of the tapering is hugely mitigated already.  Many governments have failed to address it, and have knowingly produced a market for new bikes, electric vehicles, and higher pension contributions.

Exactly. There is a cliff edge at £50000 for those claiming child benefit too which is just as penal, if not more so. Crazy system!