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Publication - Independent report

How to pay for a Minimum Income Guarantee

Published
18 June 2025
From
Cabinet Secretary for Social Justice
Directorate
Social Security Directorate
Topic
Children and families, Communities and third sector, Cost of living crisis, +2 more … Economy, Equality and rights
ISBN
9781836914884

On behalf of the independent Minimum Income Guarantee Expert Group, WPI Economics delivered a report which provides key recommendations around how the revenue could be raised to pay for a Minimum Income Guarantee.

View supporting documents Supporting documents

Annex I: Modelling tables

Table 18: Expected additional revenue from each revenue-raising scenarios.
Revenue-raising options Scenario under consideration Total fiscal cost expected per year[236] Total additional revenue expected per year Stage of powers required
Scenario 1: Reducing Scottish Income Tax thresholds Reducing the Higher Rate threshold to £40,000 AND Reducing the Additional Rate threshold to £58,285 £672m £674m Stage 1
Scenario 1: Changing the council tax ‘multipliers’ (Stage 1) Increasing council tax across a five-year period by:
  • 3% (plus inflation) rise for Bands A-D each year;
  • 7.5%, 12.5%, 17.5% and 22.5% for properties in Bands E, F, G and H respectively in the first year (plus inflation); and
  • 4%, 5%, 7.5% and 10% (plus inflation) for Bands E, F, G and H respectively for the next four years.
 £163m (Year 1) £242m (Year 2) £322m (Year 3) £406m (Year 4) £497m (Year 5) £205m (Year 1) £312m (Year 2) £414m (Year 3) £522m (Year 4) £640m (Year 5) Stage 1
Scenario 3: Reducing the Scottish Income Tax personal allowance (Stage 2) Reducing the Scottish Income Tax personal allowance by £5,000 from £12, 570 to £7,570. £2.68bn £2.93bn Stage 2
Scenario 4: Expanding Scottish Income Tax to dividends and savings (Stage 2) Applying Scottish Income Tax rates, bands and thresholds for earned income to income from savings and dividends. £81m £83m Stage 2
Scenario 5: Increasing NICs rates (Stage 3) Increasing the main employee rate, employee rate above UEL and employer rate by 1ppt.[237] £1.38bn £1.38bn Stage 3
Scenario 6: Increasing and broadening the VAT base (Stage 3) Increasing the standard and reduced rate of VAT by 1ppt. AND Scrapping the zero rate and setting this at the new reduced rate. N/A £891m Stage 3
Scenario 7: Increasing excise duties (Stage 3) Increasing fuel, alcohol and tobacco duties by 10% N/A £152m Stage 3
Table 19: Distributional analysis of Scenario 1: Reducing Scottish Income Tax thresholds, 2024-25 (Stage 1)
Income Decile Population Mean household disposable income pre-reform Mean household disposable income post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 538,799 £286.88 £286.88 £0.00 0.0% 0 0 538,438 0%
2 537,727 £521.17 £520.88 -£0.29 -0.1% 0 15,283 525,685 3%
3 547,800 £610.19 £609.41 -£0.77 -0.1% 0 23,987 517,999 4%
4 529,367 £648.75 £648.23 -£0.52 -0.1% 0 22,114 510,324 4%
5 538,229 £753.22 £751.70 -£1.51 -0.2% 0 69,958 469,086 13%
6 538,161 £867.25 £863.51 -£3.74 -0.4% 0 141,705 397,247 26%
7 541,350 £974.29 £967.28 -£7.01 -0.7% 0 229,750 306,208 42%
8 534,520 £1,123.09 £1,113.81 -£9.28 -0.8% 0 327,568 214,782 61%
9 541,406 £1,264.53 £1,249.38 -£15.14 -1.2% 1,562 437,550 94,969 81%
10 534,912 £2,115.98 £2,088.40 -£27.58 -1.3% 12,794 519,732 5,530 97%
Table 20: Distributional analysis of Scenario 2: Changing the council tax multipliers, 2024-25 (Stage 1)
Income Decile Population Mean household disposable income pre-reform Mean household disposable income post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 538,438 £287.11 £286.58 -£0.53 -0.2% 54,057 282,765 201,616 53%
2 540,968 £521.45 £520.80 -£0.65 -0.1% 44,983 356,734 139,251 66%
3 542,855 £610.67 £609.81 -£0.87 -0.1% 36,247 424,098 82,510 78%
4 531,831 £648.63 £647.82 -£0.81 -0.1% 21,691 416,487 93,653 78%
5 538,782 £754.13 £753.14 -£0.98 -0.1% 22,845 470,683 45,254 87%
6 538,952 £867.79 £866.76 -£1.03 -0.1% 23,032 482,408 33,512 90%
7 535,958 £974.89 £973.07 -£1.82 -0.2% 2,926 511,185 21,847 95%
8 542,350 £1,123.77 £1,121.59 -£2.18 -0.2% 786 540,145 1,419 100%
9 534,081 £1,265.22 £1,262.90 -£2.32 -0.2% 0 531,903 2,178 100%
10 538,056 £2,116.74 £2,113.54 -£3.20 -0.2% 0 538,056 0 100%
Table 21: Distributional analysis of Scenario 2: Changing the council tax multipliers, 2025-26 (Stage 1)
Income Decile Population Mean household disposable income pre-reform Mean household disposable income post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 539,760 £297.22 £296.43 -£0.79 -0.3% 58,699 305,693 175,368 57%
2 544,746 £545.02 £544.13 -£0.89 -0.2% 36,892 380,324 127,530 70%
3 543,464 £615.41 £614.37 -£1.04 -0.2% 29,447 409,626 104,391 75%
4 524,990 £675.41 £674.60 -£0.81 -0.1% 28,201 417,823 78,966 80%
5 539,586 £785.42 £783.95 -£1.47 -0.2% 17,895 464,319 57,372 86%
6 544,080 £872.22 £870.22 -£2.00 -0.2% 19,470 501,056 23,554 92%
7 540,928 £1,023.78 £1,021.06 -£2.72 -0.3% 7,743 514,466 18,719 95%
8 532,345 £1,156.02 £1,152.73 -£3.29 -0.3% 0 527,580 4,765 99%
9 534,316 £1,307.59 £1,304.15 -£3.44 -0.3% 752 528,946 4,618 99%
10 538,056 £2,191.48 £2,186.76 -£4.72 -0.2% 0 538,056 0 100%
Table 22: Distributional analysis of Scenario 2: Changing the council tax multipliers, 2026-27 (Stage 1)
Income Decile Population Mean household disposable income pre-reform Mean household disposable income post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 539,284 £306.53 £305.49 -£1.04 -0.3% 71,665 290,169 177,450 54%
2 543,657 £555.89 £554.21 -£1.68 -0.3% 28,242 392,286 123,129 72%
3 533,075 £632.06 £630.84 -£1.22 -0.2% 63,426 373,923 95,726 70%
4 537,902 £680.88 £679.66 -£1.22 -0.2% 42,040 430,271 65,591 80%
5 537,335 £786.15 £784.13 -£2.02 -0.3% 28,141 467,734 41,460 87%
6 540,028 £906.43 £903.85 -£2.58 -0.3% 11,262 492,055 36,711 91%
7 542,875 £1,042.23 £1,038.64 -£3.59 -0.3% 15,403 513,033 14,439 95%
8 538,857 £1,178.47 £1,174.16 -£4.30 -0.4% 1,507 533,247 4,103 99%
9 531,202 £1,329.30 £1,324.78 -£4.52 -0.3% 2,440 525,832 2,930 99%
10 538,056 £2,234.75 £2,228.51 -£6.24 -0.3% 0 538,056 0 100%
Table 23: Distributional analysis of Scenario 2: Changing the council tax multipliers, 2027-28 (Stage 1)
Income Decile Population Mean household disposable income pre-reform Mean household disposable income post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 538,643 £311.01 £309.67 -£1.34 -0.4% 40,328 291,868 206,447 54%
2 542,706 £566.01 £564.26 -£1.75 -0.3% 44,965 364,513 133,228 67%
3 534,494 £641.13 £639.55 -£1.59 -0.2% 55,147 383,838 95,509 72%
4 537,504 £696.42 £694.72 -£1.69 -0.2% 38,351 418,537 80,616 78%
5 542,455 £803.64 £801.10 -£2.55 -0.3% 11,808 480,244 50,403 89%
6 534,051 £922.66 £919.42 -£3.24 -0.4% 16,638 478,433 38,980 90%
7 537,883 £1,062.37 £1,057.84 -£4.53 -0.4% 8,161 510,964 18,758 95%
8 539,668 £1,192.23 £1,186.86 -£5.37 -0.5% 714 533,344 5,610 99%
9 536,811 £1,356.15 £1,350.48 -£5.67 -0.4% 0 531,441 5,370 99%
10 538,056 £2,275.72 £2,267.83 -£7.89 -0.3% 0 538,056 0 100%
Table 24: Distributional analysis of Scenario 2: Changing the council tax multipliers, 2028-29 (Stage 1)
Income Decile Population Mean household disposable income pre-reform Mean household disposable income post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 538,409 £316.69 £315.09 -£1.60 -0.5% 63,361 304,506 170,542 57%
2 538,751 £574.81 £572.76 -£2.05 -0.4% 68,452 381,493 88,806 71%
3 544,079 £652.73 £650.54 -£2.19 -0.3% 19,723 424,013 100,343 78%
4 532,350 £711.90 £709.75 -£2.15 -0.3% 61,990 402,284 68,076 76%
5 537,881 £820.61 £817.53 -£3.09 -0.4% 13,946 485,776 38,159 90%
6 541,933 £939.98 £936.07 -£3.91 -0.4% 25,652 493,789 22,492 91%
7 542,677 £1,081.59 £1,076.04 -£5.55 -0.5% 7,802 514,622 20,253 95%
8 533,436 £1,221.38 £1,214.77 -£6.61 -0.5% 1,807 528,619 3,010 99%
9 536,998 £1,386.11 £1,379.09 -£7.02 -0.5% 0 531,628 5,370 99%
10 535,757 £2,327.29 £2,317.66 -£9.63 -0.4% 0 535,757 0 100%
Table 25: Distributional analysis of Scenario 3: Reducing the Scottish Income Tax personal allowance, 2024-25 (Stage 2)
Income Decile Population Mean household disposable income pre-reform Mean household disposable income post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 538,438 £286.88 £283.51 -£3.38 -1.2% 16,953 259,073 262,412 48%
2 540,968 £521.17 £506.81 -£14.36 -2.8% 11,858 423,968 105,142 78%
3 541,986 £610.19 £595.08 -£15.10 -2.5% 8,484 431,758 101,744 80%
4 532,438 £648.75 £630.99 -£17.75 -2.7% 7,461 424,172 100,805 80%
5 539,044 £753.22 £729.62 -£23.60 -3.1% 5,382 493,406 40,256 92%
6 538,952 £867.25 £838.32 -£28.93 -3.3% 1,683 508,321 28,948 94%
7 535,958 £974.29 £944.41 -£29.88 -3.1% 7,776 513,529 14,653 96%
8 542,350 £1,123.09 £1,088.28 -£34.81 -3.1% 14,675 524,677 2,998 97%
9 534,081 £1,264.53 £1,230.04 -£34.49 -2.7% 6,224 527,857 0 99%
10 538,056 £2,115.98 £2,085.78 -£30.19 -1.4% 70,772 467,284 0 87%
Table 26: Distributional analysis of Scenario 4: Expanding Scottish Income Tax to dividends and savings, 2024-25 (Stage 2)
Income Decile Population Mean household disposable income pre-reform Mean household disposable income post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 538,438 £286.88 £286.83 -£0.05 <-0.1% 0 18,406 520,032 3%
2 540,968 £521.17 £521.15 -£0.02 <-0.1% 0 4,332 536,636 1%
3 541,986 £610.19 £610.17 -£0.01 <-0.1% 0 3,836 538,150 1%
4 532,438 £648.75 £648.70 -£0.05 <-0.1% 0 17,175 515,263 3%
5 539,044 £753.22 £753.18 -£0.04 <-0.1% 0 11,816 527,228 2%
6 538,952 £867.25 £867.21 -£0.04 <-0.1% 0 10,699 528,253 2%
7 535,958 £974.29 £974.15 -£0.14 <-0.1% 0 10,732 525,226 2%
8 542,350 £1,123.09 £1,122.95 -£0.14 <-0.1% 0 28,600 513,750 5%
9 534,081 £1,264.53 £1,264.15 -£0.37 <-0.1% 0 27,852 506,229 5%
10 538,056 £2,115.98 £2,110.09 -£5.89 -0.3% 0 84,436 453,620 16%
Table 27: Distributional analysis of Scenario 5: Increasing NICs rates, 2025-26 (Stage 3)
Income Decile Population Mean household disposable income pre-reform Mean household disposable income post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 541,512 £296.86 £296.73 -£0.13 -0.0% 10,689 66,650 464,173 12%
2 542,994 £545.64 £544.60 -£1.03 -0.2% 18,865 177,797 346,332 33%
3 543,464 £615.08 £614.03 -£1.04 -0.2% 15,375 219,836 308,253 40%
4 524,990 £675.00 £673.90 -£1.11 -0.2% 6,501 271,736 246,753 52%
5 539,282 £785.03 £782.09 -£2.94 -0.4% 0 355,648 183,634 66%
6 545,065 £871.13 £866.69 -£4.44 -0.5% 5,340 392,462 147,263 72%
7 540,247 £1,023.78 £1,017.37 -£6.41 -0.6% 2,502 405,870 131,875 75%
8 532,345 £1,155.31 £1,148.37 -£6.94 -0.6% 0 435,468 96,877 82%
9 534,316 £1,306.87 £1,295.50 -£11.37 -0.9% 0 469,587 64,729 88%
10 538,056 £2,190.69 £2,169.55 -£21.14 -1.0% 0 452,775 85,281 84%
Table 28: Distributional analysis of Scenario 6: Increasing and broadening the VAT base, 2024-25 (Stage 3)
Income Decile Number of households Mean household VAT paid pre-reform Mean household VAT paid post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 260,053 £10.54 £13.57 £3.03 29% 0 260,053 0 100%
2 258,302 £15.48 £19.75 £4.27 28% 0 258,302 0 100%
3 259,562 £17.23 £21.40 £4.17 24% 0 259,562 0 100%
4 256,969 £17.39 £22.32 £4.93 28% 0 256,969 0 100%
5 257,668 £24.88 £31.34 £6.45 26% 0 257,668 0 100%
6 256,501 £24.21 £29.99 £5.79 24% 0 256,501 0 100%
7 260,816 £28.27 £35.04 £6.77 24% 0 260,816 0 100%
8 254,065 £35.69 £43.86 £8.17 23% 0 254,065 0 100%
9 258,605 £61.35 £71.94 £10.58 17% 0 258,605 0 100%
10 257,020 £68.35 £80.44 £12.10 18% 0 257,020 0 100%
Table 29: Distributional analysis of Scenario 7: Increasing excise duties, 2024-25 (Stage 3)
Income decile Number of households Mean household excise duty paid pre-reform Mean household excise duty paid post-reform Mean change Mean proportional change Number of gainers Number of losers Number of no change Proportion of losers
1 260,053 £5.70 £6.27 £0.57 10% 0 164,962 95,091 63%
2 258,302 £7.20 £7.92 £0.72 10% 0 191,637 66,665 74%
3 259,562 £6.35 £6.99 £0.64 10% 0 161,979 97,583 62%
4 256,969 £7.96 £8.76 £0.80 10% 0 194,290 62,679 76%
5 257,668 £11.17 £12.29 £1.12 10% 0 219,549 38,119 85%
6 256,501 £9.26 £10.18 £0.93 10% 0 218,476 38,025 85%
7 260,816 £12.50 £13.75 £1.25 10% 0 234,456 26,361 90%
8 254,065 £11.55 £12.71 £1.16 10% 0 230,399 23,666 91%
9 258,605 £17.87 £19.66 £1.79 10% 0 239,023 19,583 92%
10 257,020 £18.77 £20.65 £1.88 10% 0 238,908 18,112 93%

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