Both £33,000 and £26,000 have been quoted as the threshold below which Scottish taxpayers will pay less tax as a result of the Budget’s tax policy announcements.

But which figure is correct?

Undoubtedly on the tax side the big announcements today related to changes to income tax in Scotland. Derek MacKay announced that his draft budget proposed:

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• Introducing a new ‘starter’ rate of income tax of 19 per cent on incomes between the Personal Allowance (£11,850 in 2018/19) and £13,850

• The Basic Rate will be maintained at 20 per cent on incomes between £13,950 and £24,000

• A new Intermediate Rate of 21 per cent will be introduced on incomes from £24,000 to £44,273

• The Higher Rate threshold will be increased to 41 per cent, whilst the Additional Rate will be increased from 45 to 46 per cent.

The Scottish Fiscal Commission estimates that these tax decisions will raise around £164m of additional revenues for the Scottish budget in 2018/19.

But who will pay more and who will pay less as a result of these tax decisions?

In its Budget, the Scottish Government says “When combined with the increase in the Personal Allowance next year, these proposals mean that nobody earning less than £33,000 will pay more income tax in 2018-19 than they do this year.”

The Scottish Fiscal Commission in its Fiscal Forecast report states: “All taxpayers with gross incomes below £26,000, in 2018-19, will see their tax liabilities reduce by a maximum of £20.”

The key difference is the policy baseline that the announcements are compared to.

Under the Scottish Government’s proposed income tax policy, everyone earning under £33,000 will pay less tax in 2018/19 than they did this year (2017/18).

BUT part of this is due to the increase in Personal Allowance, which would have happened anyway, i.e. irrespective of any announcement made by Mr Mackay.

The increase in the Personal Allowance from £11,500 to £11,850 saves a typical taxpayer (i.e.all taxpayers earning less than £100,000) £70 per year.

Taking the personal allowance rise into account, it is more accurate to say that the policies announced by the Government today mean that everyone earning less than £26,000 will pay less tax in 2018/19 than they would have done without the tax announcements.

This was the opportunity for the Scottish Government to unveil their proposals for how the new tax powers of the Scottish Parliament should be used.

But, as with any minority government, the Scottish Government now require to get the consent of at least one other party in order to be able to pass their budget early next year.

This means that there is scope for the proposals announced today to change between now and the budget bill being passed in February.