Meeting of the Parliament 19 February 2026 [Draft]
Tory members might not like facts being pointed out to them, but they are facts nonetheless.
The positive economic indicators that I have set out demonstrate the continued resilience of the Scottish economy.
In last year’s budget, our tax strategy made specific commitments for the remainder of this parliamentary session. Those commitments were to keep the same number of income tax bands; not make any increases to rates; ensure that the starter and basic rate thresholds rose by at least inflation; and continue the position whereby a majority of taxpayers could expect to pay less than they would in the rest of the UK. We have stuck to those commitments for 2026-27, and the rate resolution delivers that.
We propose increasing the basic and intermediate rate thresholds by 7.4 per cent in 2026-27, which is an investment of more than £50 million in lowering households’ tax bills. When considered alongside the policy last year, it means that the basic and intermediate rate thresholds will have risen by about twice the rate of inflation over the past two years.
We are continuing with our balanced approach and propose maintaining the higher, advanced and top rate thresholds at their current levels. It means that we are asking those with broader shoulders to pay a little more so that the public services that people rightly expect can continue to be delivered.
Many families will feel the benefit of the Government’s policies cumulatively, rather than just in relation to income tax alone. Such policies include free prescriptions, the abolition of peak rail fares, free higher education and the Scottish child payment, which the Tories no longer seem to support.
When combined, those savings often outweigh the small annual tax differences between those in Scotland and those in the rest of the UK. For example, Scottish households in the lower half of the income distribution are, on average, about £480 better off per year than they would be under UK tax and social security policies. We have fulfilled our tax strategy objective to provide stability for the remainder of this parliamentary session, and we have delivered our commitment to protect lower-income households.
We hear time and again, from other parties in the chamber, calls for additional spending by the Government. However, the reality is that we cannot will these things into existence. It requires dialogue, difficult choices and the conviction to make that happen, and that is what this Government is doing. It also requires resources. We cannot will the means into being; we have to provide them, and the rate resolution does so.
In the run-up to the budget, we were grateful to those colleagues across the chamber who entered into meaningful engagement with the Government. Our balanced, progressive approach to income tax policy goes some way to allowing us to protect the social contract that provides a range of services not available elsewhere in the UK. The income tax proposals that I have set out today underpin the entire budget settlement that we have been debating in the Parliament and provide the investment that ensures that our public services can be properly funded.
Let me set out the positive changes that will go ahead only if the Parliament votes for the rate resolution and the overall budget. For a start, income tax bills will be lowered for most taxpayers in our society, putting more money in people’s pockets to help with the current cost of living pressures. From April 2027, the Scottish child payment will be boosted to £40 a week for families with a baby aged under one, which will provide additional support for those who need it most. There will be a record £17.6 billion for NHS front-line services, supporting the vital work of general practitioners and primary care services, and more than £5 billion will be put towards measures that will reduce Scotland’s carbon emissions.
The Government is clear on what its priorities are and what they mean to households across Scotland. That is why I ask members to vote to ratify the proposed changes to Scottish income tax in 2026-27.
I move,
That the Parliament agrees that, for the purposes of section 11A of the Income Tax Act 2007 (which provides for Income Tax to be charged at Scottish rates on certain non-savings and non-dividend income of a Scottish taxpayer to be charged above the personal allowance), the Scottish rates and limits for the tax year 2026-27 are as follows—
(a) a starter rate of 19%, charged on income up to a limit of £3,967,
(b) the Scottish basic rate is 20%, charged on income above £3,967 and up to a limit of £16,956,
(c) an intermediate rate of 21%, charged on income above £16,956 and up to a limit of £31,092,
(d) a higher rate of 42%, charged on income above £31,092 and up to a limit of £62,430,
(e) an advanced rate of 45%, charged on income above £62,430 and up to a limit of £125,140, and
(f) a top rate of 48%, charged on income above £125,140.