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Pay and benefits: key differences in Scotland and Northern Ireland

Updating authors: Ian Holloway and Nicky Stibbs, consultant editor (Scotland): Gillian MacLellan, consultant editor (Northern Ireland): Gareth Walls

Future developments

Scotland

Income tax personal allowances: Personal allowances are frozen until tax year 2027/28. See Pay As You Earn for more details.

Income tax thresholds: Income tax thresholds are frozen until tax year 2027/28. This will not apply to Scottish taxpayers where rates and thresholds are a shared responsibility, set by the Scottish Parliament annually.

Income tax rates and thresholds (Scottish taxpayers): On 19 December 2023, in its draft budget for tax year 2024/25, the Scottish Government increased the starter and basic thresholds, incrementing them in line with inflation. The other thresholds remain frozen, although a new Scottish advanced rate (45%) is introduced, to be paid on earnings between £75,000 and £125,140. The Scottish top rate increases to 48% (from 47%). The other rates remain unchanged. Scottish taxpayers and employers will therefore have six rates and thresholds (starter at 19%, basic at 20%, intermediate at 21%, higher at 42%, advanced at 45% and the top at 48%).

Bankruptcy and diligence: The Bankruptcy and Diligence (Scotland) Bill was introduced to the Scottish Parliament on 27 April 2023. The Bill proposes various changes to the diligence process including proposed changes relating to earnings arrestments where an employer is served with an arrestment order. If enacted, the Bill will also put in place enabling provisions for regulations to allow for a "mental health moratorium" on diligence. The Bill is making its way through the Parliamentary process. On 25 May 2023, the Economy and Fair Work Committee, responsible for scrutinising the Bill, launched a consultation on the Bill. The consultation closed on 21 July 2023 and the responses have been published.

Northern Ireland

Allocation of tips: In the rest of the UK, the Employment (Allocation of Tips) Act 2023, expected to come into force in 2024, will provide for how employers must deal with tips, gratuities and service charges. No corresponding legislation has been introduced in Northern Ireland.

Fit note reform and voluntary occupational health frameworks: On 22 November 2023, the UK Government in its Autumn Statement announced a review of the fit note process and development of occupational health frameworks. This will not apply in Northern Ireland.