Hard-working households across Scotland are facing a significant financial squeeze following the Scottish Government's latest Budget announcement. Finance Secretary Shona Robison has unveiled a series of fiscal measures that critics have labelled a 'hammer blow' to middle earners and businesses, rejecting calls for income tax cuts.
Tax Threshold Freeze and New Levies
In a move that has sparked widespread controversy, Shona Robison confirmed the thresholds for the higher, advanced, and top rates of income tax will be frozen. This fiscal drag means that as wages rise with inflation, more people will be pulled into higher tax brackets. Official Scottish Government figures project that 106,000 additional Scots will be paying the top three rates of income tax by the 2026/27 financial year as a direct result.
While the basic and intermediate rate thresholds will see a 7.4% increase, the maximum annual benefit for those at the lower end is a modest £32, equating to just 61p per week. Alongside this, the Budget paves the way for a new 'mansion tax' on properties valued over £1 million through the creation of two new council tax bands. Furthermore, a novel levy will be applied to private jets landing in Scotland, a policy championed by the Scottish Greens.
Spending Priorities and Business Backlash
The Budget also outlines a substantial increase in public spending in specific areas. Total social security expenditure is set to rise by 6.5%, reaching £7.23 billion in 2026/27. This includes an inflationary uplift for the Scottish child payment, which will increase to £40 per week for children under one from next year. Spending on overseas development and the Scottish Government's international offices will also grow.
However, the business community has reacted with alarm. Leaders have condemned the failure to postpone a business rates revaluation, warning it will lead to catastrophic bill increases for many firms from April. Reliefs offered to the retail, hospitality, and leisure sectors were dismissed as being 'way short' of what is necessary. Scottish Conservative finance spokesman Craig Hoy accused the SNP of 'clobbering' middle-earners and leaving businesses 'on the brink'.
Capital Cuts and Political Reaction
Several long-promised capital projects face the axe under the spending plans. These include a series of NHS national treatment centres intended to tackle waiting lists, and a commitment to fully dual the A96 between Aberdeen and Inverness appears downgraded, with ministers now pledging only to upgrade 'key sections'.
In her final Budget speech before the Holyrood elections, Shona Robison defended the plans, stating, 'My message to the people of this country is clear... you will be better off in so many ways because you live in Scotland'.
Analysis from the Institute for Fiscal Studies (IFS) offered a more sobering outlook. David Phillips, head of devolved and local government finance, noted that while there were giveaways, 'the biggest policy announced was a tax rise: freezing the top three income tax thresholds'. He warned that a tight funding environment means many public services face real-term budget cuts. Scottish Labour's finance spokesman, Michael Marra, dismissed the Budget as 'more of the same' and failing to meet the nation's aspirations for change.
