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Top earners in Scotland face paying hundreds more in tax than rest of UK

If you're looking forward to opening that Christmas wage packet, you might be interested to know that exactly how much is in it may soon depend on where in the UK you live.

The Scottish government now has the power to set its own rates of income tax, and today it used it.

In his budget, the Scottish Finance Secretary Derek Mackay MSP announced that the basic rate of income tax - 20p - will stay the same. But if you earn £43,430 or more, you'll start paying 40p on your earnings, unlike in the rest of the UK, where the higher rate threshold is due to rise to £45,000. It means anyone on that amount will pay £314 more in Scotland.

The Scottish government said that a tax cut for the 'top 10%' of earners couldn't be justified at a time of austerity, promising higher investment in public services instead.

People in Scotland will still pay 40% tax once you earn £43,430.
The 40% threshold is set to rise to £45,000, meaning anyone on that amount will pay £341 more in Scotland.

But the SNP will need the support of at least one opposition party to get the changes through, and that's far from certain.

The Scottish Conservatives unsurprisingly support their Westminster sister party, and think the 40p threshold should be raised in Scotland as in England, Wales and Northern Ireland.

Their Finance Spokesman Murdo Fraser MSP claimed the differential would make Scotland the highest taxed nation in the United Kingdom and drive higher earners south of the border.

The SNP will need support from at least one opposition party to get the tax changes through.

But while the Conservatives want less taxation, Labour want more. Their Scottish leader Kezia Dugdale told the Scottish government it should be raising the top rate of tax (on those earning over £150,000) to 50p.

Some wheeling and dealing will need to be done by February when the Scottish Parliament votes on the changes.

But whether the tax thresholds are right or wrong, for the first time they are likely to be different, depending on where in the UK you live.