New 45% tax band for higher earners announced in Scottish Budget

It will apply to those earning between £75,000 and £125,140.

Deputy First Minister Shona Robison announced the new tax band (Andrew Milligan/PA) (PA Wire)

A new tax band of 45p in the pound will be created in Scotland, the Deputy First Minister has announced.

Shona Robison said in her Budget statement at Holyrood on Tuesday that the “advanced” band will apply to those earning between £75,000 and £125,140.

The top rate of tax, levied against those earning above this figure, will rise by 1% next year to 48p in the pound.

In other areas of tax, the three lowest rates will see no increase to their rates while the starter and basic rate bands will increase by the level of inflation.

The changes will bring in another £1.5 billion to Scotland’s finances next year, Ms Robison said.

She also said the Scottish Government will fully fund its proposed council tax freeze, providing local government with the equivalent of a 5% rise.

Ms Robison told MSPs the Office for Budget Responsibility projection for inflation next year is 3%, but she wants to “go further than that”.

She said: “That’s why I will fund an above inflation 5% council tax freeze – delivering over £140 million of additional investment for local services.

Due to Westminster mismanagement of our economy, too many households are worrying about debt

Shona Robison

“Combined with the other support being provided to local government, this will increase their overall funding by 6% since the last budget, taking local government funding to a new record high of over £14 billion.”

Councils will be provided with £1.5 million to wipe out school meal debt incurred by pupils across Scotland.

“Due to Westminster mismanagement of our economy, too many households are worrying about debt,” Ms Robison said.

“With our limited powers there is only so much we can do. However, where we can step in, we will.

“That is why I am pleased to confirm we will provide local authorities with £1.5 million to cancel school meal debt, removing a worry hanging over families up and down the country who are struggling to make ends meet.”

Other announcements include freezing business rates for premises valued at less than £51,000 and giving 100% rates relief to hospitality businesses in Scotland’s islands.

Funding for NHS boards will rise by £550 million – or 4.3% – and amounts to £13.2 billion.

Liz Smith, the Scottish Conservative finance spokeswoman, accused Ms Robison of a “discourtesy” to Parliament through a late delivery of the Budget document to MSPs.

Ms Smith said: “I can’t see any acknowledgement anywhere – none whatsoever – that the Scottish Government takes any responsibility for the current fiscal circumstances.”

She criticised Government waste on “failed projects” – which sparked an angry exchange among seated MSPs – and said the SNP is “pandering to the Greens” rather than improving services.

On tax, she asked: “Do you really think… that you are sending out the right message that Scotland is open for business?

“For economic growth, for investment, innovation and job creation? Because it’s abundantly clear that business and industry doesn’t think so.”

Ms Smith said local government is getting “perhaps less than half” of what it has asked for.

Scottish Labour finance spokesman Michael Marra said it was a “chaotic Budget from an incompetent Government that will leave ordinary Scots paying much more and getting much less in return”.

He said the fiscal shortfall is an “SNP waste gap”, saying if economic growth had kept pace with the rest of the UK, it would have been £8.5 billion larger.

Mr Marra said Humza Yousaf had “panic-spent public money following the Rutherglen by-election”.

He said: “Tax cannot and should not be used as a substitute for economic growth.”

While Scottish Secretary Alister Jack said the decision to increase taxes on the highest paid would be “bad for our economy”.

In a statement released after the budget, Mr Jack said the announcement would deter business investment and punish Scots.

“The Scottish Government has a record block grant yet wastes hundreds of millions of pounds,” he said.

“It needs to take responsibility for its spending choices and the resultant, self-inflicted, budget black hole, rather than blaming the UK Government and penalising Scottish taxpayers.

“The UK Government is cutting tax for individuals and for businesses. The Scottish Government should do the same.”