Hundreds of Scottish Government staff paying lower income tax in England

The Scottish Conservatives said the figures were ‘embarrassing and telling’

Hundreds of Scottish Government employees are paying lower income tax because they are resident in England, figures show.

A total of 280 civil servants live down south, where higher earners pay less than they would in Scotland.

Everyone earning more than £28,850 pays more income tax in Scotland as a result of changes introduced by SNP ministers.

The Scottish Government building at Victoria Quay, Leith

The Scottish Conservatives, who uncovered the figures following a Freedom of Information request, said it was “embarrassing and telling” that so many staff live south of the border and pay a lower rate. In total, 16,345 people work across Scottish Government departments, meaning 1.7 per cent reside in England.

It comes after Shona Robison, the deputy first minister, announced further tax divergence from the rest of the UK last month as she laid out the Government’s budget. Under the plans, the top rate of tax will increase by 1p in the pound, while a new rate for those earning above £75,000 will be introduced.

Tory MSP Liz Smith said: “The growing gulf in tax rates is a huge disincentive for people to live and work in Scotland, and one of the factors most likely to inhibit the economic growth we so desperately need. It is embarrassing and telling that so many Scottish Government staff should be paying the rate that applies south of the border to avoid the punitive tax imposed by the SNP.

“While it is entirely understandable that those with valid grounds for doing so – for example, if their family home is in England – should choose to avoid the extra tax imposed by the SNP, it is also a humiliating rebuke to their employer.

“And, after the latest tax hikes in Shona Robison’s disastrous Budget, it would be no surprise if more people in the south of Scotland moved house to Berwick or Carlisle – to avoid being clobbered further.

“These figures are a portent of the growing behavioural change we can expect in the wider workforce, which experts have warned about, because the SNP Government continue to make it more expensive to live here.

“Those huge extra costs for middle earners actually bring in a tiny proportion of the SNP’s funding shortfall, but they risk driving away the doctors, dentists, business people, engineers and others that are crucial to Scotland’s economic health.”

Last month, a senior banking figure warned workers in the financial sector are choosing to live in northern English cities rather than move to Scotland where they would pay more income tax.

Judith Cruickshank, managing director of commercial mid-market at the Royal Bank of Scotland, said she had heard "many anecdotal stories" of higher earners deciding to live in cities such as Manchester, Newcastle and Liverpool.

She said the issue had been raised as a "challenge" by members of Scottish Financial Enterprise (SFE), the representative body of Scotland's financial services industry, where she sits on the board.

Professor Graeme Roy, chair of the Scottish Fiscal Commission, has said the Scottish Government should undertake work to evaluate the behavioural impact of its tax choices.

A spokesperson for Ms Robison said: “We will take precisely zero lessons from the Tories on tax policy – their credibility rating was downgraded to junk status the moment they demanded we copy Liz Truss’s disastrous tax policies, which wiped billions from the economy, endangered pension funds and pushed up mortgage interest rates.

“Official statistics show that thousands more people have moved from Tory-run England to SNP-run Scotland than vice versa in the last few years – and no wonder. Thanks to the SNP’s progressive tax decisions, the majority of people in Scotland pay less income tax than they would elsewhere in these islands, and average Scottish council tax bills are also hundreds of pounds lower than south of the border. Meanwhile, everybody in Scotland benefits from universal services like free prescriptions when they are ill, and their kids can attend some of the finest universities right on their doorstep without paying a penny.”