Scotland given separate income tax rates from the UK for the first time

Scottish Parliament - Anita Gould

MSPs have passed measures setting all income tax rates and bands in Scotland for the first time in the Scottish Parliament's history.

The vote means from April the current thresholds where wages are taxed in different bands will be frozen in Scotland, while the threshold for the 40p rate will start at £43,000, compared to £45,000 elsewhere in the UK.

The move represents an agreement between the SNP and the Scottish Greens as the minority Scottish Government sought backing for its budget.

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Those living in Scotland who earn over £43,000 will not face a tax bil of up to £400 more than their counterparts south of the border.

Finance Secretary Derek Mackay said: "The Government is always mindful of the impact that taxes may have on individuals. Tax powers are not a political toy; they have an impact on individuals, which we must consider carefully. We are a Government that recognises the importance of growing the economy while raising sufficient revenue to fund further investment in our vital public services."

Conservative finance spokesperson Murdo Fraser said around 374,000 people will face higher tax bills.

"There are many thousands of households that include two adults and children, and in which just one adult in the household is working—the other has childcare responsibilities—and earns just over £43,000, which therefore represents the entire household income. Those are not wealthy individuals and they are not individuals who have spare cash at the end of the month, yet they are the individuals whom the SNP is targeting with its proposals," he said.

However Scottish Labour accused the SNP and Greens of pursuing "Tory austerity" instead of a "fair tax system".

Speaking after the vote deputy leader Alex Rowley said: “This was a vote that will enter the history books, and nobody will ever forget how the SNP and Greens voted to reject a fairer tax system for Scotland.

The Scottish Greens abstained from the final vote, meaning the Scottish Government's proposals were passed.

Greens co-convener Patrick Harvie said: "Some members have spoken about forgoing a tax cut that the UK Government is pursuing. We need to forgo such language and the thinking that compares tax policy in Scotland with tax policy south of the border. We should compare ourselves with the country that we want to be, not with our nearest neighbour.

"While the Scottish Government’s position is somewhere in between the glowing praise and the outright condemnation [from the other parties], it is certainly not the ambitious and creative approach to tax policy that I would like to vote for, so I will not be voting for it. However, I will not block the motion, because of the consequences of blocking it."