Scotland introduces income tax raise for top earners

The Scottish government has announced it will increase the tax paid by the country’s highest earners, as it bids to raise extra money to fund wage increases in the public sector.

Finance secretary Derek Mackay outlined the Scottish government’s budget proposal for 2018 on Thursday, with the higher and top rates of income tax to rise by 1p in the pound, while the basic rate will remain at 20p.

That would put the top rates of income tax at 46% and 41%, from 45% and 40% respectively.

Mackay said the new policies will mean anyone earning less than £33,000 in Scotland will not pay any more tax.

The finance minister added that the new tax structure would “build a fairer Scotland and put the progressive values of those government into action. It invests in public services and supports businesses to develop and thrive”.

Those saving for pensions are likely to benefit most from the new tax bands, according to Nathan Long, senior pensions analyst at Hargreaves Lansdown.

“All of a sudden the incentive to save for retirement is now greater in Scotland for those earning over £24,000 and those earning between £11,850 and £13,850 than the rest of the UK,” Long said.