Sarah Coles, Head of Personal Finance, Hargreaves Lansdown: “Yet again, higher earners are stepping in to fill the government’s coffers in Scotland. Taxpayers enjoy key additional benefits north of the border – not least free prescriptions, a universal Winter Fuel Payment for pensioners from next year and no tuition fees for Scottish students studying in Scotland. However, they’re picking up the bill for this with higher taxes – particularly among those who earn more.
Already, around 1.5 million people who earn more than £28,850 pay more income tax than they would elsewhere in the UK. The changes today will ease the tax burden for those further down the income spectrum, because by increasing the thresholds, it will protect them from the horrors of fiscal drag, which pushes more people over tax thresholds with each pay rise.
Finance Secretary Shona Robison has announced that the threshold of the basic band and the intermediate band would increase by 3.5% as part of the Scottish Budget.
The freezes for higher earners pile more tax misery on an already hefty burden. The Scottish government is keen that those with the broadest shoulders carry the biggest burden, but those shoulders will be feeling increasingly painful.
Whenever tax changes kick in, it raises the question of whether it will be enough to persuade higher earners to leave Scotland. However, you don’t need to part with the attractions of life north of the border in order to pay less tax. Tax free allowances including ISAs and SIPPs can play an essential role in keeping your tax bill down, rather than having to consider anything more drastic.”
|
