Rathbones calls for Scottish Income Tax reform to support economic growth

Rathbones has called for reform of Scotland’s Income Tax system, warning that higher rates and greater complexity risk deterring investment and making it harder to attract skilled workers.

The firm said Scotland’s six-band income tax system places a higher tax burden on many professionals, business owners and senior executives than elsewhere in the UK, creating challenges for employers seeking to recruit and retain talent.

Rathbones made the comments following Anas Sarwar’s appointment as Minister of State for Trade, arguing his new role presents an opportunity to strengthen Scotland’s economic competitiveness and promote policies that support growth.

Gordon Lawrie, head of Rathbones’ Edinburgh office, said: “Having a senior Scottish Labour figure at the heart of government in Westminster presents an opportunity to strengthen Scotland’s voice on the factors that will shape its long-term competitiveness.

“Across Scotland, we act for people in leading businesses and world-class universities and see the challenges they face in attracting and retaining skilled senior people.

“There is a clear tension between Scotland’s devolved income tax regime and wider UK growth ambitions.

“The current system is significantly more complex than elsewhere in the UK and places a materially higher burden on many professionals, business owners and senior executives.

“Our advisers see individuals who work in Edinburgh but choose, for tax reasons, to live south of the border and commute – this is not good for Scotland.”