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

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

The 2026 Scottish Parliament election marks a shift from traditional issues like schools and hospitals to a focus on tax and welfare. For the first time, voters are directly shaping a debate over Scotland’s unique fiscal policies, which have evolved since 2017. The Scottish National Party (SNP)’s victory in the 2021 Holyrood election under Nicola Sturgeon intensified this divergence, setting the stage for a pivotal contest on economic priorities.

Diverging Tax Structures

In the UK, all adults benefit from a personal tax threshold of £12,570, where no income tax is levied. Scotland, however, has adopted a more complex system with six tiers of taxation, compared to three in England, Wales, and Northern Ireland. This means lower earners in Scotland face slightly reduced tax burdens, while middle and higher earners pay more. The Institute for Fiscal Studies (IFS) estimates that 55% of Scottish taxpayers earning up to £33,500 annually will see financial gains over UK residents in the same bracket, though the advantage is modest, at around £40 annually or 77p weekly.

The remaining 45% of taxpayers, earning above £33,500, will see a reduction in take-home pay compared to UK residents. For instance, a £50,000 income in Scotland results in an additional £1,500 in annual income tax, rising to £5,200 for those earning £125,000. The SNP government in Edinburgh frames this system as a progressive model designed to address deep-rooted inequalities and reduce poverty. However, critics argue that abrupt tax rate increases at different income levels could discourage individuals from pursuing higher earnings, potentially hampering growth and productivity.

Social Security and the Scottish Child Payment

Alongside tax changes, the SNP has expanded social security spending. In 2021, Sturgeon introduced the Scottish Child Payment (SCP), offering financial support to low-income families. The payment started at £10 per week per child under six and has since been increased to £28.20, with eligibility expanded to include children up to 15 years old. Current First Minister John Swinney has announced plans to further raise the payment to £40 for families with children under 12 months, if his party wins the election.

For Laura Derrick, a mother in Inverclyde, the SCP is a lifeline. “It’s really important,” she says.

“Without it—and UK-administered child benefit—my family would be really struggling.”

She works 12-hour weekend night shifts as a carer, while her husband is also employed. Despite their efforts, the family finds it difficult to manage expenses. “We’re doing the best we can, and that extra help really does make the difference,” she adds.

The Joseph Rowntree Foundation (JRF) estimates that 210,000 Scottish children, or just over 1 in 5, live in relative poverty. These children reside in households where post-housing cost income falls below 60% of the UK’s median income. The SNP’s welfare policies aim to alleviate such pressures, but the economic implications of their tax system remain a contentious issue. Meanwhile, Jenna Lindsay, who manages Cafe Continental in Gourock, feels the political debate about taxation is far removed from her daily struggles.

“It’s full on,” she says. “You’re like, how am I working all this and I’ve got nothing to show for it? It’s hard.”

“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.

Prospects and Challenges

The IFS calculates that the Scottish system could generate £1.8 billion more in revenue compared to the UK model, but actual projections suggest it will likely fall short by around £800 million due to behavioral adjustments and a slowing growth trend in earnings. This financial disparity underscores the debate over whether the SNP’s policies are truly progressive or create unintended disincentives for economic mobility. As voters head to the polls on 7 May, the balance between tax fairness and welfare support will define the election’s outcome.