Chaired by the First Minister, the Scottish Government Resilience Committee has said it will consider urgently all options within devolved powers for regulatory action to limit increases in costs for people, businesses, and other organisations.

Wylie & Bisset tax partner Catherine McManus believes that leaves the door open for a review of the Scottish Rate of Income Tax.

She notes that whilst the Scottish Rate of Income Tax (SRIT) is not entirely a devolved regime, the Scottish Government does have the capacity to vary income tax rates from the rest of the UK on non-savings and non-dividend income.

It also has capacity to vary the thresholds on which the varying income tax rates are paid. To date, these powers have largely been used to disadvantage Scottish taxpayers, whose rates of income tax on employed earnings are currently higher than the rest of the UK.

Ms McManus said: “Scottish taxpayers currently face greater income tax liabilities than taxpayers in the rest of the UK, so the question is whether the Scottish Government would consider bringing Scottish taxpayers back into line with UK wide rates, even if cut by a new Prime Minister, so that we have a level playing field across the country for employed taxpayers.

“Or perhaps the Scottish government could go a step further and use its regulatory powers to take Scottish taxpayers’ tax liabilities below the liabilities of taxpayers in the rest of the UK for the first time since it has had the regulatory powers to do so.”

She concluded: “At a time of widespread strikes, rising salaries and inflation at its highest rate in 40 years, the burden on Scottish taxpayers remains, for many, disproportionate to taxpayers in the rest of the UK and, as such, if the Resilience Committee is serious about using all routes available to it to ease the impact of the cost-of-living crisis on individuals, a review of the income tax regime should be considered.”