Want to be a middle earner paying 52% in income tax? Move to Scotland

Scotland England border at Carter Bar © Getty Images
Welcome to Scotland. That’ll be a couple of grand, please.

Here we go again. Nicola Sturgeon has started talking about raising the top rate of income tax in Scotland to 50%.

She has done this before – and ended up backing away from it every time, because she knows that if you charge people 50% on one side of a border and 45% on the other side of it, they will move. Taxes up. Revenues down.

It is, in this case at least, a given. Still, that doesn’t mean that Sturgeon isn’t having a go at introducing some stealth income-tax rises on those her party think of as the well off.

Consider what Bob Hair of Cazenove calls the “tartan tax trap”. Here, the 40% tax threshold has been frozen at £43,000 (it is now £45,000 in the rest of the UK). That doesn’t sound like a particularly big deal. It is.

This year, it means that anyone earning £50,000 pays £400 more in income tax in Scotland than they do in the rest of the UK. By 2020, assuming the Scottish threshold is frozen and the UK one moves up to £50,000 as planned, those on a £50,000 salary will be paying £1,600 more in income tax.

And to add insult to injury, it is worth noting that a new tax band has been created in Scotland. The National Insurance thresholds are set to work with the UK-wide income tax levels. So you pay 12% up to the 40% threshold and 2% beyond that.

That means that on the difference between the Scottish and UK thresholds the miserable Scottish taxpayer must pay 12% – so an effective tax on income of 52%.

Live in Scotland and want to take home the same amount as money as someone living in England and earning £50,000? By 2020 you’ll need to be earning £52,760, says Hair.

I wonder how long it will take Scotland’s not-particularly-high-earners to notice that living on the Scottish rather than the English side of the border will soon cost them the equivalent of a family holiday in the sun every year.

  • kidmugsy

    Berwick and Carlisle must be looking forward to it.

  • L Parsons

    If you have children of university age and aptitude or elderly parents, let alone both, £2,000 a year in extra tax looks like a pretty good bargain for a middle earner.

    • Money Week

      good luck getting your kids into Scottish uni if you live in Scotland. numbers have had to be firmly capped to contain costs.

      • L Parsons

        Higher academic hurdles and lower financial barriers for university entry look like a good plan to me. Life maiming quantities of debt for easy access to a degree of dubious merit less so.

  • Jack Rhodes

    “Free” Prescriptions ,uni fees,bus passes,

    • Triple H

      Exactly. As always, articles here love bashing anyone who is not a ‘Con’. People have to pay through the nose in England for prescriptions, be worried about parking tickets while they take a loved one to hospital, find it terribly hard to get a dentist on the NHS in ye-old England and so on. 400 extra a year is such a bad deal Merryn?

    • smspf

      These are benefits not even pensioners in the German economic powerhouse would enjoy. Oddly the continentals do appear to have enough savings left to afford a decent hairdresser, though.

  • Highlander

    Merryn i am sick to the back teeth of your anti Scottish bile. If you continue to politicise moneyweek i will cancel my subscription and encourage others to do so.
    You lot dont give a donald about the less well off in this country. Why dont you spend some time at a food bank and ask yourself why ?

    • Merryn

      @highlander. I am not remotely anti Scotland. I live here and love it. I do, however, think that the current Scottish government is doing a lousy job of running things. I’d prefer Scotland to have a better government – one that made running Scotland’s services well its first priority.

      • LG

        Isn’t there a perfectly reasonable trade off between higher taxes and wider provision of free public services (such as free Uni fees and free prescriptions, etc). People might take the view that living in a country with a more ‘progressive’ attitude to tax and public services is quite attractive.

        Isn’t that exactly what the Scandi countries do? Has everyone left Norway yet?

        • Highlander

          How good a job do you think the Tories are doing given that the Uk Is still running a huge monthly revenue deficit with an outstanding debt balance exceeding £ 1.6 trillion. It would also help if you could explain how this deficit will reduce when huge capital expenditure plans are in place via Trident, HS2, Repairs to Houses of Parliament, Bucky Palace, Ad nauseam. It just shows how well thought out their strategy was of making the poorest in society pay for the debt by cutting benefits, increasing Vat and robbing the rest of us via inflation. But I digress somewhat. Scotland is not in control of its main economic levers and has to depend on its annual (hand out) allocation. Education may sit within the Scottish Governments portfolio, but in essence it is run by local authorities where Labour Party cronyism is rife. The curriculum for excellence will take time to bed-in and deliver its anticipated outcomes, but with the recent elections increasing SNP power at local level, we expect to see greatly improving results. The problem for many of the electorate is that they are tied to an anchor of poverty and in this regard the whole country suffers.

          • LG

            I assume your comment was meant for MSW? I’m just trying to hold the nuanced centre ground here. Nationalist like yourself need to appreciate there would be a significant and long lasting economic cost to independence. Unionists like MSW need to appreciate there is a perfectly natural Scottish aspiration for self determination.
            Time will tell which is the stronger force or whether both can coexist.

Merryn

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