Scotland Holds Firm on Income Tax Rates as Political Tensions Rise

First Minister John Swinney has made it clear that the Scottish government is not preparing to increase income tax rates or create any new tax bands in next year’s budget. His comments came during a heated session of First Minister’s Questions, where political pressure was intense following major tax decisions made by the UK government. Although he confirmed that rates and bands will not rise, he avoided giving a definite answer on whether existing income thresholds will remain the same, leaving some uncertainty for Scottish taxpayers as the budget season approaches.

UK Tax Policies Cast a Long Shadow

The debate in Scotland follows Chancellor Rachel Reeves’ recent budget announcement, which included more than twenty 26 billion in tax rises. One of the biggest moves was the extension of the freeze on income tax thresholds. This freeze means that as people receive pay increases, they may be pushed into higher tax brackets even without formal changes to tax rates. The move has been controversial across the UK and has sparked fresh debates in Scotland about how devolved tax powers should be used.

Heated Accusations in Holyrood

During the parliamentary session, Scottish Tory leader Russell Findlay launched a strong attack on the UK chancellor’s decisions, accusing her of hurting taxpayers and increasing national debt while going against earlier promises. He then shifted attention back to the First Minister, pressing him on whether he would honour the SNP’s manifesto commitment to avoid raising taxes on Scottish workers. Findlay argued that families and workers were already facing high living costs and deserved relief in the form of lower tax bills.

Scotland’s Seven Band Tax Model

Scotland operates a different income tax structure from the rest of the UK. Holyrood’s system includes seven income tax bands, giving ministers greater flexibility but also placing them under constant political scrutiny. Finance Secretary Shona Robison had already signalled earlier in the day that the government’s broader tax strategy would remain unchanged ahead of the Holyrood election next year. Swinney echoed this message, stating that the government is considering the effects of the recent UK budget but intends to maintain its current direction.

A New Funding Opportunity from Westminster

One important development is the UK government’s decision to scrap the two-child benefit cap, a policy that has long been criticised by campaigners and Scottish ministers. The cap’s removal means that the Scottish government now has an estimated one hundred and fifty-five million pounds available, money that was previously set aside to offset the impact of the cap on Scottish families. Russell Findlay argued that this newly freed-up funding should be used to lower tax burdens for Scottish workers.

A Different Vision for Tackling Child Poverty

John Swinney pushed back on this proposal, explaining that the funds would instead support efforts to reduce child poverty. The First Minister stressed that investing in children is one of the most meaningful steps a government can take for the future of the country. He also expressed satisfaction that Scottish pressure contributed to the UK government finally removing the two-child cap, a policy he described as unfair and harmful to vulnerable families.

Political Values at the Heart of the Debate

The disagreement between the two sides comes down to competing priorities. Conservative politicians argue that ordinary workers deserve immediate relief through lower taxes. The Scottish government argues that those on higher incomes can afford to contribute more if it helps lift families out of poverty. Swinney made it clear that he stands by the choice to ask high earners to contribute more so the government can continue supporting those who need it most. To him, addressing child poverty is a long-term investment that strengthens Scotland’s social and economic foundation.

What Comes Next for Scottish Taxpayers

The Scottish budget will be unveiled in January, and only then will households know whether the thresholds will change or stay the same. For now, taxpayers are left with mixed signals. Rates will not increase, no new bands will be added, but the possibility of frozen thresholds still lingers. As political parties shape their strategies ahead of the next Holyrood election, income tax will remain one of the most closely watched subjects in Scottish politics.