13 January 2026
“The decision to increase the basic and intermediate rate thresholds will be welcomed by lower and middle-income earners and allows the Scottish Government to continue to use its message that many people pay less tax than they would elsewhere in the UK. It is also a politically easier move than raising the higher-rate threshold, particularly in the run-up to an election.
"However, it does little to address the growing number of public sector workers, including nurses, teachers and police officers, who are now being pulled into the 42% higher rate. These are not the ‘broadest shoulders’ traditionally associated with higher-rate tax, yet fiscal drag continues to push more ordinary earners into this bracket.
"Higher-rate taxpayers are therefore likely to be disappointed that their threshold has again been left unchanged and now lags the rest of the UK by around £7,000. For someone earning £50,000, that difference equates to roughly £1,500 a year in extra tax, a gap that is becoming increasingly hard to ignore and risks undermining Scotland’s competitiveness for skilled workers over time.”
