The higher and top-rate income tax bands will be frozen in Scotland for the coming year, the Government has announced.

SNP Minister for Public Finance, Kate Forbes, confirmed the Budget after Derek Mckay had resigned from his role as finance secretary earlier in the day.

Forbes revealed that the starter and basic-rate tax bands would increase in line with inflation, but the decision to hold income tax rates for higher earners was expected to raise £51m over the next year.

Investment specialist, AJ Bell, suggested that anyone dragged into a higher tax band would have ‘greater incentive’ to save in a pension.

Senior analyst, Tom Selby, said: “For Scottish taxpayers, the Budget itself hasn’t presented any major horrors, although there have been some tweaks to income tax bands which will impact people’s finances.

“While the personal allowance has been held at £12,500 – keeping it in line with the rest of the UK – the starter and basic-rate bands have risen in line with inflation, allowing low earners to keep a little more of their hard-earned cash from the taxman. However, the decision to freeze both the higher and additional-rate bands at a time when earnings growth in Scotland is over 2% means more people will be sucked into paying more tax.

“Those who find themselves in this position will have an extra incentive to save in a pension, with the tax relief for higher and top-rate taxpayers set at 41% and 46% respectively, 1 percentage point higher than the rest of the UK.”

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