Scottish Autumn Statement response
Today’s National Insurance cut for employees will apply to Scottish taxpayers, but existing income tax divergence means some Scots will continue to pay more income tax and National Insurance combined than taxpayers in the rest of the UK, in particular, those with earnings between the Scottish and UK higher rate thresholds who will pay a marginal tax rate of 52%.
A tax table showing the differences between Scottish and UK taxpayers is included below1.
Sean Cockburn, chair of the Chartered Institute of Taxation’s Scottish Technical Committee, said:
“This rate cut will apply to taxpayers in Scotland because National Insurance is set on a UK-wide basis.
“As things currently stand, existing income tax divergence means that Scottish taxpayers with income under £27,850 will pay less income tax and National Insurance combined, compared to those with equivalent earnings in the rest of the UK. Above this, they will start to pay more because of the higher rates of Scottish Income Tax that already exist2.”
Sean Cockburn continued:
“The Chancellor’s announcement has not addressed the specific anomaly that sees Scots with earnings between the Scottish and UK higher rate thresholds pay a higher marginal rate of tax.
“This happens because lower rates of National Insurance are aligned with the UK higher rate threshold for income tax. Even with the reduction announced today taken into account, a Scottish taxpayer with earnings between £43,663 and £50,270 will pay a marginal combined rate of 52% on that slice of income, compared to 30% elsewhere in the UK.3”
Notes to editors
1.The CIOT has prepared a table showing the differences in combined income tax and National Insurance liabilities for taxpayers in Scotland and the rest of the UK following the Chancellor’s announcement today. The changes to National Insurance take effect from 6 January 2024.
It is possible that there could be further changes when the Scottish Government publishes its own income tax plans at the Scottish Budget on 19 December.
Figures are rounded to the nearest £.
2024/25 | 2024/25 | Difference | Difference | |
Earnings | UK Income Tax & Class 1 NIC | Scottish Income Tax & Class 1 NIC | Scotland v England 2024/25 | Scotland 2023/24 v Scotland 2024/25 |
£ | £ | £ | £ | £ |
10,000 | 0 | 0 | 0 | 0 |
15,000 | 729 | 707 | 22 | 36 |
20,000 | 2,229 | 2,207 | 22 | 111 |
25,000 | 3,729 | 3,707 | 22 | 186 |
27,850 | 4,584 | 4,584 | 0 | 229 |
35,000 | 6,729 | 6,801 | -72 | 336 |
40,000 | 8,229 | 8,351 | -122 | 411 |
45,000 | 9,729 | 10,181 | -452 | 486 |
50,000 | 11,229 | 12,781 | -1,552 | 561 |
55,000 | 13,297 | 15,003 | -1,706 | 566 |
60,000 | 15,397 | 17,203 | -1,806 | 566 |
65,000 | 17,497 | 19,403 | -1,906 | 566 |
70,000 | 19,597 | 21,603 | -2,006 | 566 |
75,000 | 21,697 | 23,803 | -2,106 | 566 |
80,000 | 23,797 | 26,003 | -2,206 | 566 |
85,000 | 25,897 | 28,203 | -2,306 | 566 |
90,000 | 27,997 | 30,403 | -2,406 | 566 |
95,000 | 30,097 | 32,603 | -2,506 | 566 |
100,000 | 32,197 | 34,803 | -2,606 | 566 |
130,000 | 47,881 | 51,241 | -3,361 | 566 |
150,000 | 59,468 | 63,325 | -3,858 | 566 |
175,000 | 71,218 | 75,575 | -4,358 | 566 |
200,000 | 82,968 | 87,825 | -4,858 | 566 |
250,000 | 106,468 | 112,325 | -5,858 | 566 |
300,000 | 129,968 | 136,825 | -6,858 | 566 |
500,000 | 223,968 | 234,825 | -10,858 | 566 |
1,000,000 | 458,968 | 479,825 | -20,858 | 566 |
2. Income Tax rates and Personal Allowances 2023/24.
Scottish tax rates are: Starter (19p); Basic (20p); Intermediate (21p); Higher (42p) and; Top (47p).
A ‘marginal rate’ of tax refers to the rate of tax paid on the next pound of income.
3. Prior to the announcement, those marginal rates were 54% and 32% respectively.
4. This is the CIOT’s Scottish response to the Autumn Statement. Responses to other aspects of today’s statement can be found on our website at https://www.tax.org.uk/news/1.