Scottish election 2026: How tax and welfare are shaping the vote
Scottish election 2026: How tax and welfare are shaping the vote
The 2026 Scottish Parliament election is marking a significant shift from traditional issues like education and healthcare to a focus on taxation and welfare policies. While these topics have historically been central to political discourse, the current campaign highlights the financial challenges faced by voters, particularly concerning income tax and social security.
A Tax System Diverging from the UK
Since 2017, Scotland has developed a distinct approach to income tax and social security, a trend accelerated by the Scottish National Party’s (SNP) victory in the 2021 Holyrood election. Now, the vote on 7 May will determine whether voters support this divergence or prefer alternative models proposed by other parties.
Every UK adult earning below £125,140 enjoys a £12,570 personal allowance exempt from income tax. However, Scotland’s system introduces six tax brackets, compared to three in England, Wales, and Northern Ireland. This structure means lower earners benefit from slightly reduced tax burdens, while middle and higher earners face significantly higher payments.
Impact on Household Finances
The Institute for Fiscal Studies (IFS) estimates that 55% of Scottish income taxpayers earning up to £33,500 annually will see a modest financial gain—no more than £40 per year or 77p weekly—compared to their UK counterparts. Conversely, those earning above £33,500 will pay an additional £1,500 in income tax annually, with the difference rising to £5,200 for earners at £125,000.
Despite these figures, the SNP argues its model is more progressive, aiming to reduce inequality through targeted redistribution. Economists, however, question this claim, noting the system’s abrupt tax rate increases could discourage work and economic growth.
“It’s full on. You’re like, how am I working all this and I’ve got nothing to show for it? It’s hard.” – Jenna Lindsay, manager at Cafe Continental in Gourock
For Jenna Lindsay, the political debate over taxation feels distant from her daily struggles. “It’s probably just a mix of everything. You earn a wage and then it all just gets taken off you—taxes and then the cost of living. Everything’s going up,” she explains, highlighting the disconnect between policy discussions and the realities of working-class families.
Welfare Reforms Under the SNP
The SNP, which has governed Scotland since 2007, has expanded social security spending. A key initiative is the Scottish Child Payment (SCP), introduced in 2021 by Nicola Sturgeon. Initially set at £10 weekly per child under six, the payment has since risen to £28.20 and now includes children up to 15 years old.
Current First Minister John Swinney has proposed further increases, aiming to raise the SCP to £40 for families with children under 12 months old if his party wins the election. This measure is seen as crucial by many, including Laura Derrick, a mother of three living in Inverclyde.
“It’s not like we’re choosing not to work and just living off the government. We’re doing the best we can, and that extra help really does make the difference,” Laura Derrick says. She works weekend night shifts as a carer, while her husband is employed, but the family still struggles to manage expenses.
Laura and others like her rely on the SCP to avoid financial hardship. The Joseph Rowntree Foundation (JRF) reports that 210,000 children, or just over one in five, live in relative poverty in Scotland. This means their household incomes fall below 60% of the median UK level after housing costs. The debate over tax and welfare remains central to how these families navigate their economic challenges.
