Publication - Research and analysis

Scottish Income Tax: 2018-19 policy evaluation

A policy evaluation of Scottish Income Tax in 2018-19

Scottish Income Tax: 2018-19 policy evaluation


1. Scotland's Fiscal Outlook: The Scottish Government's Medium-Term Financial Strategy - (


3. The rest of the UK (Northern Ireland, England and Wales) is only used as the comparator until 2018-19. From 2019-20, Wales is exclude from the comparator due to partial devolution of Income Tax to Wales.

4. Due to the time between the end of the tax year and the Self-Assessment filing deadline (31 January of the following year), outturn data on how receipts performed is only available with a significant lag.

5. Fiscal framework: factsheet - (

6. The role of income tax in Scotland's budget - (

7. Scottish Budget: draft budget 2018-2019 - (


9. National Outcomes | National Performance Framework

10. The role of income tax in Scotland's budget - (


12. Scotland's Economic and Fiscal Forecasts | Scottish Fiscal Commission

13. See the Scottish Government papers titled The Role of Income Tax in Scotland's Budget (2017) and Understanding the Behavioural Effects from Income Tax changes (2020)


15. See page 9 of our publication Understanding the Behavioural Effects from Income Tax changes (2020)

16. The methods shown in this table are:

  • Headline method: nearest neighbour one-to-one matching
  • Alternative method 1: nearest neighbour one-to-two matching
  • Alternative method 2: kernel matching

As noted in the HMRC study, none of these methods are clearly superior to the others. We follow HMRC in using nearest neighbour one-to-one matching as the method used for our central estimates.

17. See Understanding the Behavioural Effects from Income Tax changes (2020)

18. Note that the net migration figures will not match exactly between this Chart and Chart 2, as this chart includes those who migrate and change taxpayer status in one year.

19. Scotland's Fiscal Outlook: The Scottish Government's Medium-Term Financial Strategy - (

20. The distribution of income and growth in income tax revenue – October 2020 | Scottish Fiscal Commission

21. The Gini co-efficient is a measure of how equally income is distributed across the population. It takes a value between 0 and 1 where 0 represents perfect equality.

22. UKMOD - Centre for Microsimulation and Policy Analysis

23. Scottish Government, The Scottish Government's Income Tax Policy: Analytical note on Impacts on Income Levels and Equality, 2018

24. If a household experiences a reduction in income tax, its disposable income will rise, which could reduce its eligibility for means-tested benefits. Overall, our modelling indicates that welfare expenditure fell by approximately £0.5m as a result of the policy reform, which represented a fall of around 0.01% in expenditure on means-tested benefits in Scotland.

25. Scottish income tax: 2018-2019 - (

26. Relative poverty is defined as having an equivalised household income below 60% of the UK median household income and is measured either before or after housing costs.

27. Service level agreement for operation of Scottish Income Tax by HMRC - GOV.UK (

28. Scottish Income Tax - HMRC Annual Report 2019 - GOV.UK (

29. Administration of Scottish income tax 2019/20 (

30. Administration of Scottish income tax 2019-20 (

31. Income Tax in Scotland - GOV.UK (




35. A PAYE Settlement Agreement allows an employer to make one annual payment to cover all the tax and National Insurance due on minor, irregular or impracticable expenses or benefits for their employees.

36. Coronavirus contaminates the budget process and payrollers suffer | ICAS

37. CIOT-ICAS-tax-manifesto-April-2021.pdf

38. CIOT_Topline_30032021.pdf (

39. Citizens' Assembly of Scotland | Citizens Assembly

40. Further information on the model can be found here.

41. Attendees were invited to read the National Audit Office's report on the administration of Scottish Income Tax for 2019-20, containing a section on the identification of Scottish taxpayers and sections on compliance.

42. It was mentioned by an attendee that there are some similar issues along the Wales-England border were the postcode straddles the border, so this appears not to be a Scotland-specific issue.

43. The Group were also made aware that the reference in footnote 1 contains a section on PSAs which they were invited to read