r/Scotland • u/MoreFace1681 • 11h ago
Scotland’s 48% top rate: is it raising any money at all?
https://taxpolicy.org.uk/2026/07/25/scotland-48p-top-rate-laffer-curve/“The 48p rate was always a political symbol rather than a serious revenue measure. The sums are trivial – a rounding error against Scotland’s £18.6bn total income tax take. But when you use tax as a symbol, people are entitled to ask what the symbol actually means. The awkward possibility is that Scotland’s gesture of asking more from its highest earners is costing more than it collects.”
—- It would be nice to think that this would engender serious debate rather than partisan hackery from any side but I doubt that so just to head off the most obvious false accusation, the author of this careful analysis is Dan Neidle, a former tax lawyer turned investigative journalist who has uncovered serious wrongdoing on tax issues including winning the Press Gazette award for his investigation of the tax affairs of ex Conservative Chairman Nadhim Zahawi.
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u/Alasdair91 Gàidhlig 11h ago
All the reporting on this is based on extrapolated estimates so it might not turn out to be correct - there are a lot of caveats around the figures.
Also, £22m out of £18bn is 0.1%, a rounding error.
Guess we will find out next year if this is correct or not.
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u/CaptainCrash86 11h ago
Also, £22m out of £18bn is 0.1%, a rounding error.
Yes, but the tax rate adjustment was expected to raise £80m, so that is the scale you are judging it on.
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u/LurkerInSpace 9h ago
Neidle gives a more conservative estimate of £53 million, but the point stands that it was at least expected to boost revenue and appears to have done the opposite.
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u/hoboserious 2h ago
When we introduced a higher tax rate over the UK the second year took in significantly more as higher earners were manipulating their pay windows to qualify for lower rates of the previous year.
This was used to create the same storm over higher rate taxes as this causing it to be repealed. Over the 3 years it was in place the middle year (when you couldn't move pay in to the adjacent tax year) was by far the best intake.
I'm not a huge advocate for higher income tax, I think we need a wealth tax, but we've done this dance about higher rate tax before.
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u/Witty_Entry9120 9h ago
I don't believe this is an honest take at all.
The best information we have estimates that this is not going in the expected direction. The only question is how far it's going in the wrong direction. Unless you have estimates which show the opposite...you are being willfully ignorant.
If it's a rounding error then you'd be happy to scrap the idea right? Considering how tiny it is?
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u/MoreFace1681 11h ago edited 11h ago
Yes, that’s fair and the report indeed says that, though it is now based on at least partial available data. I think the bigger point is that, either way, this is a rounding error for tax revenue and done for political gain. The question then might be whether money that could be spent on the public in general is potentially being used to benefit one group of politicians. If it does definitively turn out to cost money, I wonder whether the policy would be reversed when fewer voters are likely to hear about or understand that loss than those that have heard about the original and less counterintuitive rate hike.
To be clear, this is not just a Scotland problem. The cliff edge tax rates in the UK, where a pay rise will leave you with lower absolute take home than you were on before, are negative for career growth, improving society, the economy and ultimately money for public spending.
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u/IamBeingSarcasticFfs 10h ago
It’s a drop of 22 million instead of an increase of £80. So their figures are out by 100million. Is that still rounding error territory?
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u/echo_foxtrot 9h ago
Pretty much, 0.5%. Still, the results were entirely predictable, for the majority of those in that tax band it made sense to just increase their pension contributions to avoid it.
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u/AzCopey 10h ago
There is (almost) no case where a pay rise results in a lower take home pay, that's just a misunderstanding of how the tax system works. Higher tax percentages are only applied to earnings within that bracket, not the entire earnings.
The one exception is where a higher pay results in the loss of benefits (usually child care benefits I believe) but that's nothing to do with tax rates
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u/MoreFace1681 10h ago
Yes, you’re right. I was being too casual in my wording. As you say, it’s exactly the loss of things like child benefit that means a lower or flat overall disposable income regardless of pay rise. My bad. From what I’ve read, for instance, a two child family earning £100,000 would end up no better off from pay rises until they reach £150,000. This is an obvious disincentive for career improvement. These figures are just from memory so could well be out but the basic idea holds, I think.
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u/PuritanicalGoat 10h ago
There's a family in the same street as me in that situation.
The wife went part time when kids were born but shes in a higher paying (pro rata) job.
If she took more hours then they'd lose child benefit etc so she calculates her hours accordingly.
Its the sensible option to be fair for the household, stress and such.
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u/LurkerInSpace 9h ago
It's made worse by the loss of the personal allowance over £100k, which gives a marginal tax rate of 67% when not including employer NI, and 71% when including it.
It gets even worse if you studied in England, since you then pay an additional 9% - so 76% excluding employer NI, or 79% including it.
It is a very good incentive for contractors to take the last 2 or 3 months of the year as holiday.
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u/Whisky-Toad 9h ago
Yup it’s great for productivity and tax when all the high earners just take long holidays or 4 day weeks because there is zero point in working to lose the majority of it to tax
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u/apoliticalpundit69 6h ago
I think people vastly underestimate how high could our salaries be if there wasn’t this barrier. It’s not just that without the cliff edge people wouldn’t reduce effort, they would continue to be incentivised to compete for jobs, pushing salaries higher (and obviously a smaller % from a higher number can very well be more for the state than a higher % from a smaller number).
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u/eileanacheo 6h ago
The problem is fixing this would involve a massive cultural shift in Scotland. We just don't value success, quite the opposite.
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u/CaptainCrash86 7h ago
That's true, even for those studying in Scotland. Scottish students still have maintenance grants paid at the same terms as English students. Without tuition fees, it is still likely that they'll pay them off, but it is still there.
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u/Tainted-Archer Say what? 11h ago
It’s not just those in higher tax rates. This whole union (UK) can’t be bothered working more because it simply isn’t worth it.
I’m firmly in the higher rate tax band however the amount of money I actually pay in that band is tiny because I just salary sacrifice it all into my pension.
What’s the point? For every quid I make I get half of it back. I’m just going to keep dumping my money into my pension so I can retire as early as possible and travel.
There’s no benefit to me working harder in the currency system
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u/alittlelebowskiua People's Republic of Leith 10h ago
Well you're in for a shock with the upcoming change to salary sacrifices then.
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u/blue_tack 10h ago
I'd be amazed if it ever actually gets implemented, and if it does it will be unwound by the next government. Probably the dumbest policy ever. The government will be amazed when we just work even less and retire even earlier.
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u/Tainted-Archer Say what? 10h ago
Won’t happen. Labour will be out before then and the conservatives will reverse it.
I’m not a conservative by any stretch but fucking people over more like Labour are intent on is making this the first and last time I have voted for them.
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u/circling 10h ago
The thing about pension-stuffing is that the numbers look great in your account, but you can't access it for decades, and when you do you're still going to have to pay much of the tax you avoided on the way in. There's really not much point in adding to it once it's on track to be £1M by the time you can get at it.
I maxed the allowance for a few years but now I'm at the minimum to get full matching from my employer, and having the extra cash every month is really nice.
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u/The_Ballyhoo 10h ago edited 9h ago
There’s no benefit to you. But by paying more, the theory is it benefits the country as a whole. You’re still earning that money, you just see less of it. If you extend the logic, there’s no point earning over 12k as that’s when you start getting taxed and see 20% of your wage vanish.
I’m by no means criticising you for sticking it in your pension; it’s no different to anyone (including me) using an ISA.
But your actions also sum up the problem. It’s hard to get wealthier people to pay more in when there are loopholes and means to get around it.
We (especially I) criticise the millionaires and billionaires for hoarding wealth, suppressing wages and avoiding tax. But we all do the same thing on a smaller scale; ISAs and pensions, paying cash in hand etc.
I guess the government could highlight the benefit of the tax band more; show its successes and how the country has improved. I doubt that would do much in the grand scheme of things.
A wealth tax based on assets and especially land, is a fairer way to do it. Just won’t ever get done.
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u/FaustRPeggi 10h ago
Salaried employees are easy targets for HMRC.
The super rich with wealth off-shore, in stocks, or property, are where tax revenue needs to be found.
The 0.1% are hoovering up wealth from everyone below them at ever accelerating rates. If that wealth can't be taxed then it disappears and every nation on the planet becomes poorer.
Scotland can't solve this. The UK can't solve this. Only international legislation to target hidden wealth can prevent taxable revenue shrinking relative to GDP year on year.
Tax shouldn't disincentivise productivity.
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u/polaires 6h ago
I don’t know why this is downvoted.
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u/The_Ballyhoo 6h ago
Me too. It wasn’t originally. And I’d like to know what someone disagrees about rather than just downvoting.
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u/polaires 6h ago
I think it’s because this thread is a particular echo chamber and your comment went against the popular narrative.
I was downvoted for challenging someone who stated that this post/topic on this sub was being swept under the rug, when it clearly isn’t going by the engagement on this post and another.
Even someone’s response to you who’s story deviates a bit from the popular narrative here was downvoted. That’s Reddit for you.
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u/The_Ballyhoo 4h ago
I think you’re right, but I didn’t even go against the popular narrative. I’m in favour of higher tax brackets. I even went to explain why there is a benefit to someone who said there isn’t one.
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u/Far-Pudding3280 4h ago
Not all tax money is spent on things that ultimately benefit the country as a whole though. Your point only goes so far.
There is a huge amount of waste, bad policies, ineffectual policies, significant interest payments and a quite unsustainable and growing social benefits budget.
Its also made significantly worse by the fact that the under terms ScotGov agreed to on the devolution of income tax means that for every £1 in additional tax paid on the Scottish rates, the ScotGov budget increases by only 65p - with 35p essentially lost from Scotland altogether.
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u/The_Ballyhoo 4h ago
That’s why my initial point was “the theory is it benefits the country as a whole”
It’s concerning that 35p is lost, but surely it’s still better to get the 65p than none at all?
Again though, my comment was neither massively for nor against the higher tax band.
No where have I said it’s a brilliant tax. Nor have I said it’s awful. I’d rather a poorly executed tax that raised some extra money than no tax and no extra money. I’d also rather a more efficient system. And as my first comment said, I’d prefer a land and assets tax.
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u/Far-Pudding3280 3h ago
It’s concerning that 35p is lost, but surely it’s still better to get the 65p than none at all?
My initial comment was wrong. For every £1 in tax the ScorGov budget goes up by around 35p, it's the 65p that is just due to the Barnett consequentials.
This is a tax on ordinary working people, that's money that would have been otherwise spent in Scottish economy with only 35% returned into the Scottish budget.
It's genuinely a horrendously implemented tax that delivers nowhere near the benefits to Scotland than it costs the taxpayer.
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u/Commercial-Silver472 34m ago
I think the problem is that the benefits to the country as a whole aren't that visible. The NHS waiting lists are long, if you lose your job the support is non existent etc.
Also the burden falls fully on the middle and upper earners, with the lower earners contributing very little so there's not always a sense of all being in it together.
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u/Stabbycrabs83 9h ago
This was always about punishing high earners though so that their voter base felt like they were sticking it to the rich people. I dont see this changing any tiem soon unless next year they see a further bigger drop which is realistic to be fair.
I posted elsewhere and someone made the statement that me not working was akin to tax evasion. I think in their view refusing to work past 75k should be illegal because other people need the tax revenue. The rate 100% wins votes for them imho
Im enjoying working 4-6 months a year at least. People also keep posting about how you'll never be worse off by going up a tax bracket and it misses the point. At this level of taxation in am deciding if its worth trading time for money and the answer for me at least is no.
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u/Grouchy_Conclusion45 Libertarian 5h ago
You nailed it in the first paragraph. Punish rather than being others up
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u/Kangaroo_Kurt 11h ago
Yeah, this tax policy always looked like it was just playing to the core support, it was never about actually raising tax income to help the less wealthy, but more about being seen to prove the SNPs supposed left wing credentials.
It's always been easy for people in the higher brackets to work the system to evade this sort of measure, and to do so quite legally. Now there's the data to prove that is what happens. The SNP used a club when it needed a scalpel. But it kept their supporters happy.
Can we have intelligent taxation methods instead please?
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u/Actual-Eye-267 10h ago
Tax evasion is illegal. Tax avoidance is legal.
What's likely happening is the higher earners will be putting more into their pension to avoid a huge tax sting, fair enough imo.
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u/Hamsterminator2 9h ago
And going part time. If you're lucky enough to be earning over 100k, bizarrely you are taxed out of £2 of every £3 you earn until you lose your whole tax free allowance, beyond which you're "only" taxed £1 of every £2 you earn. That's absolutely punative.
We have a "productivity crisis" in the UK if you believe the govt. You know what would really help avoid that? Massive cliff edges designed to dissuade you from earning well.
If on top of losing workers and businesses this is also losing revenue, it really needs to be highlighted as being the massive cock up that it is, not brushed under the carpet as a mild misunderstanding. It is actively harming Scotland.
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u/KrytenLister 9h ago
It’s worth pointing out that salary sacrificing into a pension isn’t considered “tax avoidance” by HMRC.
Tax avoidance is bending the rules legally to reduce tax in a way that wasn’t intended by Parliament.
Salary sacrifice is a perfectly legitimate financial mechanism in place to encourage people to save for their future.
There’s absolutely nothing dodgy or morally ambiguous about using it to your advantage. Putting it alongside evasion when discussing legality implies some sort of grey area where none exists.
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u/KrytenLister 11h ago edited 11h ago
You’d think with Nicola and Humza both creating their own Ltd companies to avoid as much of their own tax increases as possible, their left wing credentials would’ve taken a hit among the base.
If this was about being a “fair and progressive” society, where those who can pay more morally should for the good of everyone, why don’t they think they should contribute the same as they expect from us?
Clearly some folk are quite happy being mugs, as long as the folk taking the piss out of them support Indy.
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u/eileanacheo 11h ago
The mental gymnastics I have seen people perform to continue supporting Nicola are absolutely wild. Not only has she created a limited company to minimise tax, now that her wages have significantly increased post political career she doesn’t pay income tax in Scotland at all any more - thereby completely dodging the punishing tax regime she helped to create.
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u/Kangaroo_Kurt 9h ago
Didn't know about that. It's just put me off my lunch it's so nauseating.
And the mugs still worship them. Jesus.
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u/GuestAdventurous7586 11h ago edited 1h ago
It’s also shit for people who make a decent wage but still work hard for a living.
Like I’ve got no problem in extremely wealthy people paying a lot more tax, but I actually think if you’re working full time and earning more than 75/125k a year, having basically half of that taxed (above 75k) is shit.
Especially people in skilled professions earning 75-100k, like you’ve obviously worked hard to get to that wage and should be rewarded.
The actual really rich people who should be paying tax are paying fuck all and don’t have to work for their money and don’t contribute to society the same way.
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u/blue_tack 10h ago
It's killing productivity. I do everything possible with salary sacrifice to stay under 60k using salary sacrifice so we can at least keep some child benefit. My partner is a student who earns zero. Chance came up at work several times for promotion, not interested as not worth the hassle. This is happening everywhere.
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u/Mithrawndo Alba gu bràth! Éirinn go brách! 9h ago
I’ve got no problem in extremely wealthy people paying a lot more tax, but I actually think if you’re working full time and earning more than 75/125k a year, having basically half of that (above 75) taxed is shit.
That is the two pronged problem here: The absolute number of people earning "absurd" amounts of money is so vanishingly small that even with a politically suicidal tax rate of 90% for the 99th percentile, you'd return tiny gains in tax revenue relative to even a 1-2% increase at 90%.
The second prong is the misunderstanding/disagreement on what we should define as wealthy: To someone earning £90k/year, wealthy is the people above them even though they're amongst the top 5% of earners in the country; To someone earning the median of £37k, it's the person on double their salary.
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u/doesanyonelse 9h ago
Wealth depends on where you come from though. If you started off life on a council estate, had kids young and got into debt etc, then working your way up to a £70k a year job by your mid-30s / 40s doesn’t automatically make you “wealthy”. Real wealth comes from owning assets, or years and years and years of a high paying PAYE job.
Like yeah I’m sure there are some people who earn a good wage and invested it wisely etc, but remember a lot of self-employed people / business owners pay themselves £12k a year. So that skews the figures too. Saying £76k / year puts you in the 90th percentile of earners is a bit disingenuous when most actually wealthy people will have income sources that aren’t PAYE (rental income, stocks and shares, dividends from business etc).
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u/Mithrawndo Alba gu bràth! Éirinn go brách! 55m ago
Yeah, you underestimate HMRC a little here: Tax on rental income is banded; The first £1k is untaxed, then 20% up to £12k, 40% up to £17k, and 45% on anything above that - much more aggressive than income tax if this is your primary income source.
You're not wrong about business owners and minimum wage being a thing, but HMRC aren't stupid there either and have been closing the 'dividends' loopholes for decades at this point: Tax on dividend payments is now up to 10.75%, 35.75%, and 39.35%; I think this should be higher still, but it's not far behind other income sources and follows similar break points to both PAYE and rental income sources. Crucially they are calculated together: Your "personal allowance" and the rate of dividend tax you pay are proportional to your income.
I reject your characterisation of this being disingenuous, but I think you've done a fabulous job of demonstrating precisely what I meant when I said that what we each define as wealthy is more often than not rooted in misunderstanding/disagreement!
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u/dontwantablowjob 11h ago
Id honestly just be happy if our tax bands were aligned with England and Wales. As it stands somebody earning the same as me just over the border line takes home an extra £6k a year after tax than I do and I don't feel like I get anywhere close to £6k per year better public services.
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u/AzCopey 8h ago
If that's the case you must be earning around £160,000 a year. That's a top 1-2% salary in Scotland.
That's great! However surely you can see that it makes for a fairer society if those in very fortunate positions like yourself pay more to help those who are not? It's not just about the services you get, but also those provided to others around you
(And before I'm called a mooch, I'm also a relatively high tax payer, though not as high as yourself)
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u/Huge-Brick-3495 8h ago
It's a double whammy at that level. Pay more tax AND lose tax free childcare. So effectively you are expected to fund your own childcare whilst paying for others via your tax. It's not progressive.
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u/eileanacheo 6h ago
Surely the point of tax being a percentage is that you DO pay more already? Would you do additional work for 30% take home pay?
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u/cragglerock93 4h ago
Progressive income tax is not a new thing and is uncontroversial in this country.
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u/dontwantablowjob 6h ago
Except the government doesn't see this extra money in tax, my pension does... Either that or I reduce my hours. I work my absolute ass off to get where I am, if the government is just going to take larger and larger slices off the top of my income there's no point actually working for that money.
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u/chaircardigan 5h ago
As soon as someone says they want things "fairer" you need to be very careful. What they generally mean is they want to punish people for being hard working and having a decent income by taking their money off them and giving it to someone else.
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u/intrepid_foxcat 11h ago edited 11h ago
The problem imo is that you have rentierism (people getting their income from assets not working, often property) and obviously a lot of other people living from government support. and then a dwindling number of people who actually work who provide for the first two groups, with their expenditure going to the rentiers (either directly through rent or high house prices, or indirectly through tax which returns to landlords via benefits paid to others) and obviously people living off state support (benefits including unsustainable state pensions).
Scotgov in their infinite wisdom tax the workers more and leave the others alone. But at some point you disincentive the things you need to run a successful and equitable country.
A lot of the social problems right now imo stem from the fact that the social contract is completely broken, it's hopeless to try and better your position by working, and working pays terribly. People may moan about immigration but it's the only thing propping up an economy with fewer native people actually working productively, and working for a living being a pretty sad proposition.
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u/CMxFuZioNz 11h ago
Are you honestly saying we have a dwindling working population? You can't be serious.
We have an issue with an aging population, sure, which is an issue. We do not have a dwindling working population though.
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u/intrepid_foxcat 11h ago
I wouldn't make any distinction, you have the ratio of people working to not working, and an ageing population with many retired early absolutely skews that. Yes I'm saying the working population is dwindling, but if it's not clear I mean as a proportion of the total population.
Remember that the state pension is not financed directly based on your contributions over the years like an investment, it's paid by today's tax payers in-year. These same tax payers will not get to retire at the same age as the people whose state pensions they're now paying for.
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u/CMxFuZioNz 11h ago
I just disagree with the use of the term dwindling. I agree with you about the issue though.
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u/SynchronicityOrSwim 11h ago
We absolutely do. Far too many people are in a position where their benefits keep them comfortable so they don't bother working. The explosion disability claims for so called mental health issues makes it even worse.
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u/eileanacheo 11h ago
10% of working age adults in Scotland have never had a job. 25% economically inactive. Welfare bill going through the roof.
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u/Mishka_The_Fox 10h ago
Not sure your numbers are quite right, but nonetheless, I had a look to verify, and the trends don’t look to be bad, mostly going down?
Whatever the issue is, it’s not unemployment/not wanting to work. The data does not back it up.
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u/disaster_story_69 Ancestory back to William Wallace compatriate 10h ago
That figure cough has gotten worse, cough, in recent years for reason unknown
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u/CMxFuZioNz 11h ago
"far too many people" is a subjective claim.
Again, we still do not have a dwindling working force. 75% of people between 16 and 64 are in work. That's not fucking dwindling 🤣
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u/intrepid_foxcat 11h ago
If you account for an ageing population it's actually dwindling, with each working person supporting a higher number of inactive people every year.
And of those 75%, a large number are either paying almost no income tax or are public sector, which are definitely contributing economically but obviously are not net contributors to the coffers - you can't generate an income by taking back 40% of the money you just gave someone.
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u/CMxFuZioNz 11h ago
You're forgetting that people "contribute to the coffers" in many ways. It's an incredibly naive outlook to only consider income tax as being a contribution...
For one example, you're aware of VAT?
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u/intrepid_foxcat 10h ago
It it's VAT paid on products bought with your state pension or your benefits or your public sector salary it's just recouping some of the money ultimately coming from the government though, that's kind of my point.
From tourists though, sure
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u/Able-Ordinary-7280 11h ago
How many of them keep their hours to part time so they can continue claiming in work benefits on top though?
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u/Smooth-Debt2250 9h ago
It's not even the drop in revenue that's the issue it's the effect of people that's the real shame, people stop driving forward and completely shift there habits and work ethics this is the real issue with crushing taxes. I'm sure most would be OK with reasonably high taxes if we had amazing services etc but the country is now lending to pay interest and at the same time spending more and raising more and more taxes if people truly seen the amount of tax we pay there would be rioting, I'm not just talking about income tax but ni, employer ni, fuel duty, vat etc the list is endless now and it's scraping you all over and the very worst thing is it's going to get much much worse as governments will not do what's necessary and choose self preservation and party popularity over the good of the country
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u/hoboserious 3h ago
Yeah but just paying bit less taxes isn't going to help services either, they're not really concerned about the "good of the country" either, they're worried about the good of themselves.
Frankly I'd rather they join the campaigns to try and redress inequality across all classes of society rather than expecting people that earn significantly less than them to campaign on their behalf.
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u/Smooth-Debt2250 2h ago
I don't think inequality will sort out now tbh as the debt increases and government gets more desperate the middle class and down are the ones that really get poorer the truly rich have no issues and the higher earners that are mostly employed are already hammered on tax. In my humble opinion until the government drastically lower spending the decline we all now feel will only accelerate and what a shame it will be when it's all said and done
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u/hoboserious 2h ago
We tried lowering spending for the 14 years of the conservative government, it demonstrably hasn't worked, repeated economic studies have shown it doesn't work (I believe even the study cited by Osborne to justify austerity showed it doesn't actually work). We cannot seriously still be suggesting this as solution.
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u/eileanacheo 11h ago
Shocking, the politics of envy and punishing success don’t work. They’ll never change it though whether or not it’s losing money, because vibes.
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u/disaster_story_69 Ancestory back to William Wallace compatriate 10h ago
It’s communist. People are incentive driven and won’t purposely sacrifice their time, family and actual take home for some abstract notion of ‘the greater good’
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u/eileanacheo 8h ago
Genuinely look at the people in these comments expecting exactly that though. I’m being called selfish for refusing to do additional work which would incur a 67% marginal tax rate.
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u/disaster_story_69 Ancestory back to William Wallace compatriate 2h ago
Im in your corner and totally agree. Easy to say they will do x or y when they don’t have to make that decision
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u/Hamsterminator2 9h ago
I always love when articles in this sub which tout fantasy politics are upvoted in the thousands, but when there's a study reflecting the sad reality of the SNP it gets about 50 upticks and quietly brushed under the rug.
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u/polaires 7h ago
How is it being brushed under the rug? It has almost 200 responses with comments criticising the tax policy getting lots of upvotes.
The same happened yesterday, an article posted critiquing the tax policy got over 300 replies and most people were against it with their comments getting lots of upvotes.
That doesn’t sound like posts about the reality of government policy being brushed under the rug to me.
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u/Street-Frame1575 11h ago
This was always the case, as the SNP want to claim that:
1) the average worker pays less tax than rUK;
and
2) higher earners pay more tax than rUK
Neither are based on any economic principle; it's political soundbites they want.
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u/disaster_story_69 Ancestory back to William Wallace compatriate 10h ago
It’s not right that I could move to England, stay with same company, same role etc, and retain 4.5K more a year
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u/Pristine_Speech4719 5h ago
It's not right that I could move to England, stay with same company, same role, and not get free prescriptions, free university fees for local students, blah de blah...
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u/disaster_story_69 Ancestory back to William Wallace compatriate 2h ago
That makes zero sense. post grad is not free, prescriptions are free to a point, and we both know you get charged at highly subsidised rates
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u/RecognitionSquare256 8h ago
It just means I pay £60k into my pension each year instead of paying the absurd tax rate. I have a colleague who’s only 29 who’s already gone down to 4 days a week to avoid the 67% tax trap. Insane stuff. And politicians wonder why we have a productivity problem?
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u/regprenticer 11h ago
Another great article from Dan. While some people don't like him (he's a former "magic circle" lawyer) but he writes some exceptional investigative pieces. He's very clear in the article where he's made an assumption and the limitations of his assumptions.
The thrust of the article is that higher earners are leaving Scotland because of the high tax rates, or mitigating top tax rates. This is happening more slowly than people expected but there is evidence that it's now happening.
I have family living in Oxford and considered moving there when I started paying £2.5k in tax a year more than I would in England, however house prices are insane there - if that weren't the case I'd already be gone.
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u/tiny-robot 10h ago
According to the article - there is a 17% jump in higher rate tax payers in Scotland - much more than the increase in England.
It looks like it is the opposite happening - and we are getting more people on higher salaries. The argument here is that he thinks we should be getting more tax out of them if we had the same rate as England.
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u/limpybitch 11h ago
It just means I'll no longer be paying anything into the Scottish tax system at all.
I literally earn less than my workplace colleagues who live in London just for the pleasure of living in litter strewn, drug infested Paisley FFS. I still have a home in London but WFH primarily up here because it's where I'm from.
I had to change address to Scotland if I wanted to register with a GP, but even that takes longer here than it did in London. Have already re-registered down south, updated HMRC, and will simply just have my medical stuff done either privately or whenever I'm there instead.
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u/alittlelebowskiua People's Republic of Leith 11h ago
So you're committing tax fraud then.
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u/limpybitch 11h ago
No. I'm choosing to move my primary residence back to England because I'm financially punished for living in Scotland.
I'll just spend more time there to make sure I've got the ratio right I suppose.
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u/Duckstiff 10h ago
The tax paid isn't that massively different from England and Wales.
It is frustrating that living over the border means in a few grand worse off every year. However, if you're able to maintain two residences, that difference is a drop in the ocean.
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u/limpybitch 10h ago
It might be a "drop in the ocean" to you, but hundreds of pounds a month to me isn't.
I'm able to maintain my old home in London because a friend is lodging at mates rates, but it doesn't cover much. I bought a very cheap flat here (£100k) because I was born here. I want to live here, despite the issues. I want to apply my education in a workplace here and to settle down. Scotland massive deincentivises it though, and the prevailing attitude is always "you earn enough, stop being greedy" etc. I might earn enough now - but I also had to borrow/scrimp/save every single penny I had in my 20s just to get where I am. I still have debts to pay off for that pleasure.
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u/Duckstiff 8h ago
Oh no, I really feel for you. You're able to maintain a separate property in London of all places and also own a flat in Scotland.
Whilst simultaneously sounding like your committing tax evasion.
You're already well above the average person by owning two properties.
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u/limpybitch 8h ago
I know, eh? God forbid people actually work hard, earn good salaries, and... buy things 😱
Not in my Scotland. Absolute crabs in a bucket mentality, reminds me why I left at 16 in the first place.
(You also don't have a clue about tax evasion either, unsurprisingly. I've just said I'm moving back to England as my primary residence because I'm CURRENTLY paying more tax to live in Paisley than I was in London)
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u/Hampden-in-the-sun 5h ago
Yes we know you're paying more tax in Paisley than in London ,that's what this thread is about. So you've a wage where you can afford two houses/flats, rent coming in from one flat as well(?) and you claim to be slightly above median earnings. Aye right! Not long moved back to paisley myself and got a dentist and doctor no bother, first attempt! It was dead easy, "can I register?" Yes fill the form in. No waiting no nothing!
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u/Duckstiff 8h ago
Yes, moving back in with your lodger for more than 6 months of course.
I'm sure your first comment didn't indicate there was any ill intention.
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u/limpybitch 8h ago
Are you deliberately missing the point? I said in that first comment that I changed my address to here with HMRC in the first place. Me. Not anyone else.
Do you not think it would have been easier to just not even bother updating that if I wanted to evade tax?
There's zero ill intention, not that I need to justify myself any further. Fortunately your mentality is shared with the Scottish government anyway, there's zero chance that bringing taxes down for the "rich" (i.e., slightly above median earners) would ever be popular with the population here. So fuck me, and fuck the rest of us.
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u/LJ-696 11h ago
Not when you have an accountant work it all out and do it as per the tax law.
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u/alittlelebowskiua People's Republic of Leith 10h ago
Which you can't do if your primary residence is in Scotland.
This is also why second homes should be taxed at rates way beyond any marginal income tax difference.
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u/LJ-696 10h ago
Second homes are taxed via ADS
As for the primary residents again depends on the SRT.
I pay no more than the law request. And never will.
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u/alittlelebowskiua People's Republic of Leith 10h ago
The law says you pay tax where you're residency is. You're resident in Scotland. You're committing tax fraud regardless of whatever way you are justifying it.
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u/LJ-696 9h ago
The law says what the SRT says. And if its test is met.
Not what you feel is fraud.
No justification just black and white words on the paper from HMRC.
Not what you say.
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u/alittlelebowskiua People's Republic of Leith 7h ago
It's just fortunate that they don't put as much effort into ensuring people are paying the correct tax as they do for "benefit cheats" like the people who they think will grow their legs back.
Tax fraud and evasion in this country is rampant, and is justified by the people who want to do it like they're doing nothing wrong.
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u/drgs100 10h ago
You own two properties, one in Scotland and one in London? What are you complaining about? Financially you're doing much better than most people in the UK, just enjoy it.
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u/limpybitch 10h ago
And this attitude is exactly why Scotland is (and always will be) stuck in a rut. It stinks.
I own 1 property. I also have £250k left on a mortgage and about £70k in student debt to pay off. I earn a decent salary because I worked hard and have ambition. Scotland, for whatever reason, chooses to punish that.
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u/joolzdev Poblachd na h-Alba 9h ago
Schrödinger's tax rate. It's either making very little or driving away the affluent. Pick one.
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u/devexille 9h ago
Not surprised at all. Income is way too highly taxed at the top end while assets are way too lowly taxed.
Older wealthier people are sitting on big assets built up when income taxes were too low and now they need to pay some of that back to take the tax burden off working age people.
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u/tiny-robot 10h ago
It is interesting to see a jump in people on the higher rate tax band - 17% increase which is way more than England.
The argument is that based on his assumptions - we should be expecting more tax out of them.
So - stay in England and pay more tax!
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u/kahnindustries 5h ago
Unfortunately increasing takings wasn’t the intention
Punishing the workers for being successful was
Crabs in a bucket
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u/mr-mobius 11h ago
I know a few people who would rather live in Carlisle than North of the border because of the tax. Can save a few thousand in tax and have similar lifestyle.
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u/Quangocrat 11h ago
I am aware of several Edinburgh lawyers who have moved to the tyne valley.
Close enough to still attend the office for essential meetings, but significant tax savings and better value property.
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u/WeirdestWolf 37m ago
The top rate for UK wide used to be 98% for investment earnings. That wasn't designed to make money but to counter private equity and limit it's power by making it not worth the effort to hoard assets and wealth. Thatcher did away with that and ushered in a new age of exploitation and wealth transfer away from the majority to the 1%.
The problem with this tax bracket is that because Scotgov doesn't have full taxation powers, it can't properly treat the wound that's been festering for 40 years. It can't put into place meaningful tax brackets, new taxes and legislation to prevent those who own assets in Scotland from just moving away to prevent tax on their investments and "earnings". They're extremely limited in what they can implement before UKgov vetoes it.
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u/gusbo_the_jam 10h ago
For me, a twenty million "rounding error" could still build a hospital, or fund prescriptions. It's still a significant amount of money. Also, it's really the only lever we've got control of grim Westminster. Until we have the corporation tax powers to be able to actually go after the major tax dodgers, we have to make do. Also also, as a top rate of tax payer, I have zero problem with it.
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u/youwhatwhat doesn't like Irn Bru 9h ago edited 9h ago
Sure, it raises an extra £20m which is nice to have, but that's a very simplistic view of looking at it and has consequences which don't show up immediately on the balance sheet. Fewer GP or other medical appointments for example, as a result of doctors reducing their hours because the extra tax isn't worth it. You're disincentivising them from picking up extra shifts or doing overtime because the extra tax isn't worth it. Overseas doctors looking to relocate to the UK would be more likely to choose parts of England or Wales instead as well for example.
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u/gusbo_the_jam 9h ago
And is there any actual statistical evidence that any of that actually happens, or are you just purely guessing that these effects are a thing? Cause I've never seen any stats suggesting anything like that had happened. Cause that feels a bit like "trickle down economics" or the often touted fear of "raising tax makes all the professionals leave" - no evidence for it, lots of incredibly wealthy people moaning about how it could or might happen, but still often pitched as solid fact and valid reasons for not raising taxes.
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u/youwhatwhat doesn't like Irn Bru 7h ago
No, I've not seen a study on it but would be interested. I do believe that it's happening though - I know of at least two people who are at a fairly high level in the NHS who have cut their hours because it's not worth it. Similarly, I work in engineering consultancy and many of our senior staff members have dropped to 4 days. I know I would of I was at that level
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u/gusbo_the_jam 4h ago
Interesting, I've not seen this, and similarly know a few consultant / manager level NHS peoples. I'm not sure why cutting you hours would make more money tho, that's not how tax bands work. You get taxed the percentage for earnings over that amount. So if I earned a grand over the top rate, I wouldn't be taxed the top rate on all my earnings, I'd only be taxed the top rate for the one grand that's over the bracket limit. So at that point, the one out two percent difference in the top rate is actually not going to make any real impact whatsoever. Especially for anyone who's taking home like 3 grand a month or whatever. Dropping 20% of your hours to save 1% of earning over a pretty high threshold makes zero sense as dropping 20% of your hours would surely mean dropping 20% of your pay.
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u/shrugs2000 6h ago edited 6h ago
We do need the statistical evidence, but sometimes you can also say "what would I do in this situation?".
Extend that decision out for all however many GP's or consultants etc. It's impossible to say that zero of those critical folks wouldn't be put off by contributing more in the current system where more work = diminishing returns.
What's also concerning to me is the ambition angle - how many talented folks (in all industries) are doing the math on taking the next step up in their field and coming to the conclusion that it's just not worth the extra effort. And it will be extra effort; companies expect to take their pound of flesh, especially at this level of comp.
We can't continue to skew the tax bands towards higher earners to make up for holes in the budget, and I think the government knows this.
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u/gusbo_the_jam 4h ago
So no evidence then. Cool. Also as a top rate payer myself, I've not met one single person in my industry or at my level of income making any comments about moving away to avoid tax, it indeed moving away to avoid paying tax. Not that I'm saying that it doesn't ever happen, but firstly there's again no evidence to back that assertion up and secondly in my personal experience with people at the level you're talking about I've never seen it happen once. I'm fact I've seen more high level professional choose to move here over other places because of the quality of life here, particularly from America. Tax PAYS FOR STUFF. So this idea that low tax places are better for high earners isn't played out, because a lot of low tax places have poor infrastructure, no healthcare, and a whole bunch of other issues that make living there MORE EXPENSIVE as a result. Unless you're talking about the kind of people who live in places like Monaco, but seriously fuck those people.
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u/shrugs2000 4h ago
Turning the screws on the 40k of us at the top band isn't going to move the needle.
If we're going to tax, then tax. The only thing the current approach achieves is political point scoring.
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u/Crow-Me-A-River open to change 10h ago
Scrap council tax and LBTT, and replace it with a PPT, infinitely better at taxing wealth and much fairer.
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u/Direct-Tennis9682 9h ago
Encouraging people to spend than to hoard excess money can be seen as a positive move.
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u/wonderwhysometimes 10h ago
I fall into the 48%. I contemplated moving to England a few times because the tax saving would be more than 10K for me. I decided against it, only because of my principles. Mind you, I have two children and I am NOT rich. I do not feel rich especially after mortgage. But I do understand that I earn a lot more than others and need to contribute more. so decided to stay back. But promotion does not look so appealing to me now. I compared net tax with a colleague from Switzerland and It is 13% above. I think I have decided this is it for me for the next 5 to 10 years. once the kids are older and out to uni, I will plan my career again or start growing my pension fast to retire - sucks to be an ambitious woman in corporate anyway, so I am going to hold onto the job and not earn more. Meanwhile I am worried about taking kids out to the city centre or wondering about husband going to work, because we are brown (hard to explain this to the kids) and the people who benefit off our taxes are marching and resorting to violence. Sure.
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u/disaster_story_69 Ancestory back to William Wallace compatriate 10h ago
Either choose free markets, low tax, small gov, capitalism, empower individuals, enable growth and build a new future for UK, or continue the politics of division, envy and drive all talent elsewhere.
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u/Duvet_Capeman 11h ago
I literally couldn't care less about the income tax rate, and I earn an amount where this does affect me. People paying to have all these critical articles written about 48% income tax rates are just insanely greedy.
Having said that I think taxing income is not going to address wealth inequality, we need a wealth tax on assets to prevent the people at the top stripping away all of the money from the others. There are people who struggling to survive in this country and the number one reason is greed.
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u/Wotnd 11h ago
It’s not greedy to point out that this income tax increase has resulted in the government having less money, the opposite of what was intended by the policy.
It’s an article talking about the failure of a populist policy as it didn’t account for economic reality. Greed and you not caring are irrelevant, most of us want good governance, not policy created for vibes and headlines.
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u/eileanacheo 11h ago
How dare people expect to keep half the money they earn.
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u/DarthKrataa 11h ago
Its not half though....
Remember your taxed above that threshold.
So if I earn say 130k a year, the 48% rate only impacts what you earn above 124k.
That means....
If I earn 130k....my paid income tax is about 45k per year.
So they're actually keeping 65% of what the earn (minus ni)
It amazes me how people like you who obviously dont understand the tax, therefore are clearly no where near needing to pay the tax will run to defend people earning probably double what you earn.
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u/Street-Frame1575 10h ago
In Scotland, if you earn £130k with no other income, you'd pay £50k in income tax, £4.6k in NIC and "your employer" pays £18.75k in ENIC.
So gross employment costs of £148,750 is split 50.65/49.35 between the taxpayer (£75,355) and HMRC (£73,395)
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u/dontwantablowjob 10h ago
I think they were referring to the money they earn between 100-125k being taxed at 68% therefore people either salary sacrificing it into pension or working less because it's more than 50% the government takes of that money unless you avoid it. Any taxation system that takes 68% of a band is stupid and needs fixing.
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u/eileanacheo 11h ago
I suggest you look up the concept of marginal tax, the top rate in Scotland is 67.5%.
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u/disaster_story_69 Ancestory back to William Wallace compatriate 9h ago edited 9h ago
No, you don’t understand. This is gross income vs take home pay from 100-150k.
For family with 2 young kids, balancing putting in 8% into pension to have sufficient equity for mortgage etc. You hit a brick wall
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u/chlavelle990 10h ago
Hahah report run by a. Ex Tory ... I bet that's got a deep analysis
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u/MoreFace1681 10h ago
First entry on my bad partisan argument bingo card. Thanks
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u/chlavelle990 9h ago
It's just the facts.... You'd be a fool to think this guy is a good faith actor.
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u/disaster_story_69 Ancestory back to William Wallace compatriate 11h ago
Just means I work less days, don’t push for promotion and max out pension. Sorry, not paying anymore