Scottish government keeps income tax rates unchanged, sparking controversy

In December 2024, the Scottish government released its Budget Statement, which confirmed that there would be no increases to Scottish income tax rates or new tax bands during the current session. This decision was met with mixed reactions, as it provides stability for taxpayers amid inflationary pressures that have affected household finances. A tax consultant, Deloitte, analyzed the impact of the unchanged tax rates for different salary levels. They found that individuals earning lower incomes would benefit from a slight reduction in their tax liability compared to the previous year's rates, while those in higher brackets may face increased burdens due to stagnant higher rate thresholds since 2019. Furthermore, the analysis showed that taxpayers in Scotland continue to pay less in income taxes compared to those living in the rest of the UK, particularly for lower earners, yielding maximum savings of £28.27. However, once inflation is accounted for, many taxpayers may find themselves pushed into higher tax brackets, raising concerns about future economic stability for those in the middle-income range. The Budget Statement's commitment to stability, with no new tax bands or rates, could aid in maintaining a predictable fiscal environment, but ongoing wage inflation remains a key concern for residents up and down the income scale. Ultimately, while the changes offer some relief for low earners, the impact of these structural decisions on higher earners in Scotland continues to raise questions regarding fairness and equity in taxation across the UK.