Half a million to pay more tax this year

More than half a million Scots will pay more in tax this year as a result of changes brought in at Holyrood, a new report has estimated.

For 2017-18, which was the first year ministers at Holyrood had power over income tax rates and bands, they only made minor changes.

Rather than follow Westminster’s example and increase the threshold at which people start paying the 40p rate of income tax, the Scottish Government opted to keep this at £43,000.

An estimated 507,000 Scottish taxpayers were affected by this, according to the National Audit Office.

The change has resulted in them paying an estimated £108million

“The extra tax liabilities are an average of £213 in Scotland”

more in tax.

The report said: “The extra tax liabilities are an average of £213 compared to other UK taxpayers.

This is because taxpayers in Scotland start paying the higher rate of tax (40%) when they earn £43,000, as opposed to £45,000 in the rest of the UK.”

It added that HM Revenue and Customs (HMRC) “does not expect that the difference between Scotland and the rest of the UK will lead to avoidance or evasion in 2017-18”.

However, if the tax rates between Scotland and the rest of the UK “diverge more substantially” in the future, HMRC said it would increase its compliance work north of the border.

The report was published ahead of next month’s Scottish budget, in which it is expected SNP ministers could make more changes to the income tax regime after First Minister Nicola Sturgeon called for a debate on more “progressive” use of tax.