The latest figures from the Scottish Fiscal Commission also show that more Scottish taxpayers will start paying the higher rate of tax as Scotland keeps thresholds frozen. Already higher rate taxpayers start paying 40% tax at £43,662, asubstantially lower threshold than the rest of the UK where the 40% rate kicks in at £50,271.

From 2023-24 Scottish Fiscal Commission expects the higher rate threshold to remain frozen as part of its forecast baseline, which is more in line with recent policy changes in Scotland. This adds around £129m to their forecast for 2023-24, rising to £503m by the end of the forecast. Compared to an assumption of inflation uprating of the higher rate threshold, an individual higher rate taxpayer pays up to an extra £653 in income tax in 2023-24, rising to £1,317 in 2026-27.

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