Maintaining a fair tax system

56% of income taxpayers paying less income tax than rest of UK.

No Scottish taxpayer will pay more income tax in 2020-21 on their current income, Public Finance Minister Kate Forbes confirmed as part of the Scottish Budget.

For the third consecutive year, more than half of Scottish income taxpayers will pay less tax than if they lived anywhere else in the UK.

During her Budget statement, Ms Forbes set out plans to:

  • increase the basic and intermediate rate thresholds by inflation and freeze the higher rate and top rate thresholds of income tax
  • maintain residential land and buildings transaction tax (LBTT) rates and bands at their current level – providing certainty for taxpayers
  • maintain the most generous non-domestic rates regime in the UK ensuring more than 95% of properties in Scotland are subject to a lower poundage than they would face in other parts of the UK
  • deliver 100% relief for reverse vending machines from 1 April 2020 to support the Deposit Return Scheme in advance of introduction
  • add a third LBTT band for non-residential leases
  • increase the standard rate of Scottish landfill tax to £94.15 per tonne and the lower rate to £3 per tonne to ensure consistency with planned landfill tax charges in the rest of the UK

She said:

“Scotland continues to have the fairest and most progressive income tax system in the UK, with more than half of taxpayers paying less income tax in Scotland than elsewhere in the UK.

“We are continuing to support first-time buyers and people as they progress through the property market with our progressive residential LBTT policies meaning almost half of residential property transactions pay no LBTT at all.

“We will use the resources raised through our tax decisions in this Budget to support our vital public services, end Scotland’s contribution to climate change, boost our economy and meet our ambitious targets of tackling child poverty through initiatives like the Scottish Child Payment.

“Based on commitments made by the UK Government in their Autumn Budget 2018, we do not expect any further increase in income tax divergence between Scotland and the rest of the UK this year. It is now up to the UK Government to ensure that divergence does not increase when they deliver their Budget on 11 March.”


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