Scots workers face ‘potential confusion’ as new tax regime begins

● Complexity ‘the price to pay’ for having more control of system, says expert

of complexity and potential confusion than ever before.”

The changes also create an anomaly of some middleearners paying a higher marginal rate of tax and National Insurance – in total equivalent to 53 per cent of income – than some on higher incomes. This isbecauseofthemisalignment between the two tax systems north and south of the Border.

The plans will see two extra bands added to the tax system, on either side of the basic rate – a 19p “starter” rate and a 21p “intermediate” rate for those on middle incomes. This, coupled with an increase to the tax-free allowance included in the UK Budget, will see 70 per cent of Scots pay less tax in the coming year than last year.

The changes will also add 1p to each of the higher and additional rates, making them 41p and 46p respectively, while limiting increases to the higher rate threshold to raise extra funds for local services and a public sector pay deal.

Finance Secretary Derek Mackay said the £200 million raised by the tax changes will help fight austerity and provide vital cash for public services.

Mr Mackay said: “The new income tax rates and bands will make the system more progressive and deliver additional revenues to invest in public services and the economy.

“This progressive approach to reforming income tax will not only protect the lowest earning taxpayers, but ensure 70 per cent of Scottish taxpayers pay less tax this year than last year for a given income, while the majority of Scottish taxpayers will pay less than if they lived elsewhere in the UK.”

But Conservative finance spokesman Murdo Fraser Scotland said: “Scotland’s economy is already suffering at the hands of SNP stewardship, growing at less than half the rate of the UK average.

“The SNP’S unimaginative and unnecessary tax grab will only make that worse.”