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

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

The upcoming Scottish Parliament election on 7 May is set to center on fiscal policies and social support systems, diverging from past focus areas such as education and healthcare. Scotland has pursued distinct approaches to income tax and social security compared to the rest of the UK, with this divergence intensifying since the Scottish National Party (SNP) secured a majority in the 2021 Holyrood vote under Nicola Sturgeon.

Scotland’s Tax System: A Unique Structure

Every adult in the UK receives a personal tax exemption of £12,570, but Scotland now applies six income tax brackets instead of the three used in England, Wales, and Northern Ireland. This has resulted in lower-income earners paying less tax than those in other parts of the UK, while middle and higher earners face significantly higher rates. The Institute for Fiscal Studies (IFS) estimates that 55% of Scottish taxpayers earning up to £33,500 annually will benefit financially this year, though the gain is modest—no more than £40 per year, or about 77p weekly. Conversely, 45% of earners above £33,500 will pay more in Scotland, with those earning £50,000 facing an annual tax burden £1,500 higher than elsewhere in the UK. For someone making £125,000, the difference rises to around £5,200.

The SNP government in Edinburgh argues its tax model is more progressive, designed to narrow wealth gaps in a country with deep-rooted inequality. However, some economists question this claim, noting the system’s abrupt tax rate increases may discourage individuals from earning more, potentially slowing economic growth.

Real-Life Impact: Voices from the Frontlines

“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,” says Jenna Lindsay, a bar and restaurant manager in Gourock. She admits she might not vote, describing the political debate as distant from her daily challenges. “It’s probably just a mix of everything. You earn a wage and then it all just gets taken off you—taxes and the cost of living. Everything’s going up.”

Meanwhile, in Inverclyde, Laura Derrick, a mother of three including a three-month-old, emphasizes the importance of the Scottish Child Payment (SCP). Introduced by Sturgeon in 2021, the benefit was initially £10 weekly per child under six and has since grown to £28.20, with eligibility expanded to children under 15. Current SNP leader John Swinney has proposed raising the payment to £40 for low-income families with children under 12 months if the party wins the election. “Without it, along with UK child benefit, we’d be in a dire situation,” Laura says. She works 12-hour weekend shifts as a carer, and her husband is also employed, yet the family struggles to cover expenses.

We met Laura with other local mothers at Port Glasgow’s Boglestone community centre, funded by both Scottish and UK governments. “It’s not like we’re choosing not to work and just living off the state,” she adds. “We’re doing the best we can, and that extra support really does make the difference.”

Welfare Gaps and Poverty Statistics

The Joseph Rowntree Foundation (JRF) reports that over 210,000 Scottish children, roughly one in five, are living in relative poverty. This means their household incomes after housing costs fall below 60% of the median UK income. The SNP’s expansion of social security programs, including the SCP, has been a key part of its strategy to address these inequalities.

Despite these efforts, the IFS notes that the Scottish system could theoretically generate £1.8bn more in revenue than the UK model. However, behavioral responses to higher taxes and slower wage growth in Scotland mean the actual surplus is forecast to be just under £1bn.