Middle-Income Earners Affected by New Intermediate Tax Rate of SNP

By Kenneth Halley [CC BY-SA 4.0] via Wikimedia Commons

The Scottish government announced during its Budget on Thursday that it is planning to introduce a new “intermediate” income tax rate, and increasing the existing higher and top rates.

A new rate of 21 percent is being included on annual incomes amounting between £24,001 and £44,273. On the other hand, the higher rate on incomes amounting to up to £150,000 will increase to 41 percent, and the top rate will rise to 46 percent.

A new starter rate is also being proposed, of 19 percent on incomes amounting between £11,800 and £13,850. The basic rate was frozen at 20 percent.

Workers who earn between £33,001 and £44,273 – about 30 percent of the nation – will pay annual tax amounting to over £100 under the new regime.

Derek Mackay, the Scottish finance minister, informed MSPs: “Having carefully considered contributions from the public, civic society and the business community, I have decided to reform Scotland’s income tax system.

“Using the limited powers available to us, the decisions I have reached will make our income tax system fairer.

The move was justified by the SNP, stating that under the current devolved arrangement, “income tax is the only major tax power that the Scottish Government has at its disposal.”

“These proposals will also mean that 55 percent of taxpayers – those earning up to £26,000 – will pay marginally less income tax than if they lived elsewhere in the UK. For the majority, Scotland will be the lowest taxed part of the UK.”

In a fact sheet that is intended to accompany the said proposals, the government stated: “Continued cuts to our budget by the UK Government mean that in 2019-20 our fiscal budget allocation for day to day spending will be £200m lower in real terms than it is this year.”