HIGHER rate taxpayers in Scotland will be £670 a year worse off than their counterparts south of the Border as of next April thanks to changes announced by Chancellor Philip Hammond in his Budget.

Scottish first-time buyers, meanwhile, could theoretically pay as much as £13,350 more in house-buying taxes than those in the most expensive parts of England and Wales.

In addition to raising the tax-free income tax threshold known as the personal allowance from £11,500 to £11,850 – which will also apply in Scotland – Mr Hammond announced that the 40 per cent tax band will kick in at £46,350 rather than £45,000 as it does now.

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Sketch: How Fun-time Phil sugared the pill in a taxing budget

The change will not apply in Scotland, where the higher rate kicks in at £43,000, as the Scottish Government has responsibility for setting all but the personal allowance threshold north of the Border.

This means someone on an annual salary of £50,000 will pay £9,030 in Scotland and £8,360 south of the Border, a difference of £670.

Under the current regimes the difference is £400, with the total levied on a £50,000 salary in Scotland sitting at £9,100 against £8,700 in England.

Shirley McIntosh, a tax partner at accountancy firm RSM, said while the disparity is unlikely to prompt any higher-rate taxpayers to seek to move from Scotland to England it could make people think twice about making the move in the opposite direction.

“I don’t think at the levels we’re talking about and the people who are affected we’ll be talking about people crossing the Border,” she said.

“Yes, people will complain if it affects them but it’s not enough to make them move.

“Is it enough to prevent someone moving north though? That’s a question that is difficult to answer.”

Sketch: How Fun-time Phil sugared the pill in a taxing budget

For now the difference between Scotland and the rest of the UK is likely to be theoretical, with SNP finance minister Derek Mackay widely expected to alter Scotland’s income tax bands when he unveils his own Budget next month.

However, as the Scottish Government is currently consulting on introducing a more radical tax regime it is not expected that Mr Mackay will follow Mr Hammond’s lead by raising the higher-rate threshold.

Indeed, it is likely that Mr Mackay could look at ways of raising even more income from higher earners, potentially by lowering the additional-rate threshold from £150,000 or by increasing the additional rate from 45 per cent to 47 per cent or 50 per cent.

Donald Tosh, a director at wealth manager Brewin Dolphin, said: “Over the next few years I would expect the spread between being a higher-rate taxpayer in Scotland and in the rest of the UK to widen further.”

Despite this, Moira Kelly of the Chartered Institute of Taxation, said that Mr Hammond’s income tax changes will pile increased pressure on Mr Mackay ahead of his December 14 announcement.

“The Scottish Government will have less than three weeks in which to consider the impact of today’s UK Budget and set out its own Budget proposals to the Scottish Parliament,” she said.

“Many of [Mr Hammond’s] announcements will add increased complexities to an already constrained timetable and will increase attention on how it uses its devolved tax powers.”

Sketch: How Fun-time Phil sugared the pill in a taxing budget

In addition to the income-tax giveaway, Mr Hammond announced that he will abolish stamp duty – the tax levied on home purchases in England and Wales - for first-time buyers purchasing homes worth up to £300,000.

For those living in more expensive areas such as London the relief will also apply to properties valued at up to £500,000, with first-time buyers only having to pay stamp duty on the £200,000 difference.

According to Brian Palmer, a tax policy expert at the Association of Accounting Technicians, the move “was one of the show-stopping moments” of Mr Hammond’s Budget speech.

However, as the Scottish Government replaced stamp duty with its own land and buildings transaction tax (LBTT) in 2015, Aegon pensions director Steven Cameron pointed out that “first-time buyers in Scotland shouldn’t get excited about the immediate abolition of stamp duty on the first £300,000 their counterparts in England will be able to benefit from”.

Currently there are no specific first-time buyer reliefs applied to LBTT in Scotland other than a nil-rate band being applied to properties valued at up to £145,000. The rates then rise in bands from two per cent to 10 per cent for properties valued at between £145,000 to £750,000 and 12 per cent on anything over that.

Sketch: How Fun-time Phil sugared the pill in a taxing budget

This means that a first-time buyer paying £300,000 for a property in Scotland would have to pay LBTT of £4,600.

With average house prices in Scotland sitting at around £145,000 it is unlikely that any first-time buyer would pay as much as £500,000 for their home. If they did, however, they would incur an LBTT bill of £23,350 while under the changes announced in the Budget a first-time buyer paying £500,000 for a home in London would pay stamp duty of just £10,000.

Simon Brown of property consultancy Galbraith said that the Scottish Government should now follow Mr Hammond’s lead and ensure that LBTT is “reviewed urgently”.

However, Aidan O’Carroll, a tax partner at accountancy firm EY, said Mr Mackay is unlikely to follow Mr Hammond’s lead because most first-time buyers in Scotland already benefit from the zero per cent LBTT rate.

“If you take £300,000 as the benchmark what would it cost him to increase the zero per cent rate to that level or somewhere between £145,000 and £300,000?,” Mr O’Carroll asked.

“It could be quite a costly exercise for him. Most Scottish transactions will fall between £145,000 and £300,000 and he’s raising quite a lot of money from LBTT.”

That said, Ms McIntosh at RSM said that “in the past the changes between stamp duty and LBTT have been quite closely aligned”, meaning Mr Mackay may well look to emulate Mr Hammond’s move in some way at least.