Tax rates to rise for higher earners in Scotland

Income tax rates for higher earners are expected to be increased in Scotland for the next financial year.

The BBC understands the deputy first minister, John Swinney, will announce the changes in his budget statement.

He is expected to put up the higher rate of tax from 41p to 42p in the pound and to increase the top rate from 46p to 47p.

The tax threshold for the top rate is also expected to be lowered from £150,000 to closer to £125,000.

This change has already been announced for other parts of the UK by the chancellor.

The Scottish government has frozen the threshold for the 41p higher rate in recent years - it currently begins at £43,663 in Scotland, compared with £50,271 elsewhere in the UK.

However, it not thought likely that the rate that is paid by lower earners will rise, with First Minister Nicola Sturgeon previously saying this would be counterproductive in a cost of living crisis.

Mr Swinney, who is standing in as the country's finance secretary while Kate Forbes is on maternity leave, is due to begin his budget statement in the Scottish Parliament at about 14:25.

Speaking ahead of the statement, he said the government would use its taxation powers to the "maximum extent that is responsible" and warned that "difficult decisions" will need to be made on funding for public services.

He has said his plans will help create a "fairer, more equal Scotland" and will help address inequality, create wealth and opportunity and make sure public services remain sustainable.

However, he has also warned that the country was still facing "sustained economic pressure" on public finances.

Many departments are expected to be see real-terms cuts as the government continues to grapple with high inflation and interest rates and the cost of economic support measures.

The changes to Scotland's income tax rates are designed to increase the revenue the Scottish government generates so it can spend more on key public services.

Unions and anti-poverty campaigners had been demanding tax increases for higher earners, while the Conservatives and some business voices have warned that tax rises could be a drag on economic recovery.

The changes will also widen the divergence in tax policy between Scotland and the rest of the UK.

And they will be a significant departure from the SNP's manifesto aim not to alter income tax rates for the duration of this parliament.