Scottish Budget: Could high earners be faced with a further rise in income tax?


If you are a high earner in Scotland you could be faced with paying up to 3% more tax if proposals to introduce a new rate of income tax materialise.

The first draft of the Scottish Budget, which will be delivered by Deputy First Miniter and Finance Secretary Shona Robison on December 19, will set out Holyrood’s £60bn tax and spending plans for 2024/25 but reports suggest the Scottish Government faces a £1bn ‘black hole’.

Last year’s Scottish Budget increased both the higher and top rates of income tax, in addition, a 2022 report by the Scottish Trades Union Congress (STUC) suggested the introduction of a 44% tax ban for those earning between £75,000 and £125,140, which has been speculated in recent media as a budget announcement for the coming tax year. However, a further STUC report, published last month, suggests this tax rate could rise to 45% and would raise additional revenue of £92m.

Those who would be impacted by the new tax band proposals currently pay the 42% higher rate of tax and, comparatively, those in the rest of the UK pay 40% income tax, with the same personal allowance of £12,570.

The difference between Scotland and the rest of the UK is starker when earnings reach £100,000. For every £2 earned over £100,000, the taxpayer loses £1 of personal allowance, which is then totally eroded at £125k. The marginal rate of someone in this position in Scotland is already 63%.

The new tax band is one of a handful of suggested reforms put forward by the STUC, above and beyond those announced in last year’s budget, which explore options for increasing taxes to fund investment in public services.

Other income tax reforms put forward by the STUC in its latest report include:

  • Reducing the higher rate threshold from £43,662 to £40,000
  • Increasing the higher rate and top rates of income tax from 42% and 47% to 43% and 48% respectively

Anyone earning more than £28,000 in Scotland already pays more tax than those in the rest of the UK and the  income tax system is also more complex in Scotland than elsewhere with more tax bands to contend with. Despite this, could these changes be on the radar of ministers as the look to balance the budget?  

The proposed reform will likely raise some serious concerns. One of the main concerns is that an increased tax burden on Scottish taxpayers could have a significant behavioural impact across the Scottish economy. Those most affected will be senior professionals or decision-makers who may decide to relocate themselves or their businesses to a more favourable tax system in England. This could potentially reduce tax revenues for the Scottish Government in the long term. Employers are also concerned that the additional burdens and complexity of having to implement even more tax bands in their payroll systems and tax reporting processes could be unmanageable from a cost and resource perspective. 

There isn’t long to wait until the draft Scottish Budget is published and we find out whether these proposed changes become a reality.


If you have any questions about these potential changes or how any announcements in the Scottish Budget may impact you or your business, please call 0808 144 5575 or email

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