Higher income tax rates in Scotland 'not putting off workers from moving north of the border'

Higher income tax rates in Scotland are not putting off workers from elsewhere in the UK from moving north of the Border, a study has found.

A report by HMRC found a steady increase in net migration of taxpayers in the five years from when Holyrood was handed powers over income tax in 2017-18.

On average almost 4,200 more taxpayers moved to Scotland than left each year.

In 2021-22 – the latest year of available data – £200 million in additional taxable income was brought into Scotland, with more higher and top rate taxpayers moving to Scotland than leaving.

Workers earning £28,000 or above in Scotland pay more in income tax than those living elsewhere in the UK.

A new 45 per cent band was also introduced from April 1 for people earning between £75,000 and £125,140.

The changes mean that anyone earning £50,000 in Scotland will pay £1,542 a year more than they would if they lived in another part of the UK, while people earning £150,000 will pay £6,000 more.

Douglas Ross, the Scottish Conservatives leader, was among those to warns Scots were "paying more and getting less".

Iain Kennedy, chairman of BMA Scotland, also warned the new advanced tax band could push senior health staff out of the NHS.

While the HMRC study covers a time period before the most recent tax changes, SNP ministers were quick to claim it proved workers were not being put off by a separate income tax regime.

Shona Robison, the Deputy First Minister, said it was proof the "social contract" in Scotland was working.

She said: "The latest figures show that across all tax bands and almost all age ranges in 2021-22, more taxpayers chose Scotland as their home than left – offering yet more proof that Scotland is an attractive place for people to live and work, while our progressive approach to income tax asks those who earn more to contribute some more," she said.

"We know people base the decision on where to live on a range of factors, and by coming to Scotland they have access to a range of services and benefits not available elsewhere in the UK, including free tuition and prescriptions. Scotland has the most generous childcare package for three and four year olds, and council tax is lower here than in England.

"This social contract with the people of Scotland is funded in part by our progressive income tax system."

Liz Smith, Scottish Conservatives finance spokeswoman, said: "This is desperate SNP spin and cherry-picking based on a single year, long before the tax gap was significantly widened.

"The study specifically says it can’t ‘draw definitive conclusions’ about workers’ movement. It warns that increased rates could have a significant impact but that obviously does not fit the SNP’s narrative.

"And it predates the SNP’s devastating recent tax-and-axe budget, which has been widely viewed as the tipping point in the growing tax gap between Scotland and the rest of the UK.

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