Scottish election 2026: How tax and welfare are shaping the vote

Scottish Election 2026: Tax and Welfare at the Heart of the Campaign

The Tax System in Scotland

Scottish Parliament elections have traditionally centered on schools and hospitals, yet this year’s vote marks a shift towards tax and welfare issues. Since 2017, Scotland has diverged from the rest of the UK in income tax and social security policies. This divergence intensified after the Scottish National Party secured the last Holyrood election under Nicola Sturgeon in 2021. The upcoming poll on 7 May offers voters a chance to assess the SNP’s approach and compare it to alternatives proposed by rival parties.

Every UK adult enjoys a £12,570 personal tax-free allowance. However, Scotland now has six distinct tax bands compared to the three used elsewhere in the UK. This structure means lower-income individuals pay less tax than their counterparts in England, Wales, or Northern Ireland, while middle and higher earners face increased burdens. According to the Institute for Fiscal Studies, 55% of Scottish taxpayers earning up to £33,500 annually will see a modest financial benefit—no more than £40 per year, or 77p weekly—over UK taxpayers. Conversely, those earning over £33,500 pay additional taxes, with a £50,000 income seeing an extra £1,500 annually and £125,000 earners facing a £5,200 annual difference.

The SNP’s Vision for Redistribution

The SNP government in Edinburgh frames its tax model as a more progressive system, aiming to reduce inequality. By shifting income brackets, it seeks to channel more funds to lower earners. However, some economists argue this approach creates abrupt tax rate increases, potentially discouraging work and growth. The IFS estimates the Scottish system could generate £1.8bn extra compared to UK policy, but this is expected to drop to nearly £1bn due to reduced earnings growth and behavioral adjustments to higher taxes.

Real Lives Affected by Policy

Jenna Lindsay, a café manager in Gourock, feels the political focus on taxation is distant from her daily struggles. “It’s full on,” she admits. “You’re like, how am I working all this and I’ve got nothing to show for it? It’s hard.” For her, the pressures of balancing wages, taxes, and rising living costs dominate. “Everything’s going up,” she says, highlighting the burden of everyday expenses.

“Everything’s going up.”

Social security has also seen expansion under the SNP. In 2021, Sturgeon launched the Scottish Child Payment, initially £10 weekly per child under six. It has since grown to £28.20 and extended eligibility to children under 15. Current First Minister John Swinney plans to raise payments to £40 for families with infants if the party retains power. For Laura Derrick, a carer in Inverclyde with a young baby, the benefit is crucial. “Without it—and UK child benefit—we’d be really struggling,” she explains. Her family, including her husband, works long hours but still battles to cover basic needs.

The Joseph Rowntree Foundation estimates 210,000 Scottish children, or just over one in five, live in relative poverty. This means their household incomes after housing costs fall below 60% of the UK median. Inverclyde Council’s community center in Port Glasgow became a meeting point for families like Laura’s, who rely on combined Scottish and UK government support to manage their finances.