Rishi Sunak warns the Scottish Government against raising taxes during cost-of-living crisis

The Scottish Government is expected to introduce a new income tax band in the Budget on Tuesday

Rishi Sunak says the Scottish Government shouldn’t be raising taxes during the cost-of-living crisis.

The SNP Government is due to unveil its 2024/25 Scottish Budget on Tuesday, and it is widely expected this will include the introduction of a new income tax band.

One proposal that Humza Yousaf’s Government is understood to have been looking at is a new rate of tax of 44 per cent for those earning between £75,000 and £125,000.

It is hoped this move would go some way to filling the £1.5 billion funding gap the SNP faces.

However, the Prime Minister described the prospect of raising taxes in Scotland as “disappointing”. He said he believed people should be able to keep more of the money they earned during the cost-of-living crisis.

Mr Sunak said the Scottish Government had received “record funding” from the UK Government, including an extra half a billion pounds in the recent Autumn Statement. The Prime Minister made the comments during a visit to RAF Lossiemouth to thank troops ahead of Christmas.

He said: “Scotland is already the highest taxed part of the UK. You’ve just seen a very clear direction of travel set out by the UK Government in the recent Autumn Statement, where we delivered the biggest set of tax cuts for people and businesses in decades, since the 1980s.

“I fundamentally believe people should be able to keep more of the money they earn. I think that’s important, particularly at a time when the cost of living is a concern. That’s why we’re delivering a significant cut to national insurance, kicking in in January.”

National insurance is set to be cut from 12 per cent to 10 per cent in the new year, which the UK Government says will save the average person around £450.

He also told journalists the UK Government was providing “significant” discounts to small businesses by offering 75 per cent business rates, and suggested the Scottish Government should do the same.

The Prime Minister said: “That [tax relief] has not been replicated by the Scottish Government. At a time when small businesses provide ultimately the bulk of the jobs for people, it’s important that we support them. That’s what we’re doing.

“The Scottish Government has made a choice not to use the money that they’ve been given to support small businesses.”

He said the UK Government was also cutting tax for Scottish businesses through its expensing policy, which he described as the “biggest business tax cut in a generation”.

Mr Sunak said the step showed there was a “very clear difference” between the UK and Scottish governments’ approaches to taxation.

He said: “Both of those tax cuts will benefit Scottish families, will benefit Scottish businesses. They’re a demonstration of the UK Government’s approach to driving growth and easing the cost of living and, increasingly, the SNP Government is taking a different approach and it’s ultimately up to them to explain that to people here in Scotland.

“I don’t think it’s the right approach because I think we should be cutting taxes, not raising them.”

Ahead of the Budget being unveiled on Tuesday, he said: “It’s important the Scottish Government takes responsibility for their finances.”

Finance secretary Shona Robison said Mr Sunak had a “cheek” to lecture her government on taxation.

She was visiting the Larder Cafe in Broxburn while Mr Sunak was in RAF Lossiemouth.

She told journalists: “He’s got a bit of a cheek pitching up in Scotland to say anything, given his Autumn Statement is deprioritising public spending, which will be there for all to see – so not just in Scotland, but in Wales, in England.

“To have a real-terms cut to the NHS in England is an astonishing position at a time when the services are still recovering from Covid.

“If we followed Tory spending plans, the NHS in Scotland next year would have got an extra £10.8 million, which would give about five hours of capacity in the NHS.

“Clearly, that’s not something we can follow, and wouldn’t want to follow.

“But in order to meet pay alone we will have to find about a quarter of a billion pounds of resources.”