THREE-quarters of Scots will either continue not to pay any income tax or will receive a modest tax break of up to £20 a year under the new income tax system which came into force yesterday, according to the independent economic think tank the Institute for Fiscal Studies (IFS).

The analysis refutes scaremongering made by Ruth Davidson’s Scottish Conservatives that Scots will pay more tax, as the IFS study makes clear only higher earners will actually pay more, while those on lower incomes will pay less tax than in the rest of the UK.

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Criticising the new income tax policy Scottish Conservative shadow finance secretary Murdo Fraser said on Thursday: “This is a punishing move which businesses and experts right across the country warned against. It will reinforce Scotland’s reputation as the highest-taxed part of the UK, punishing hard work and aspiration in the process.”

Research economist and co-author Thomas Pope, publishing the IFS analysis, said: “Today, the devolved Scottish income tax system has diverged further from its counterpart in the rest of the UK. Three quarters of Scots will either continue not to pay any income tax or will receive a modest tax break of up to £20 a year.”

He added: “The losers are higher-earning Scots. An individual earning enough to be in the top one per cent of UK taxpayers would pay more than £2000 per year more in tax if they live in Scotland.”

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As of yesterday, Scottish income tax policy is based on a five-band system, a change from the previous three-band one which still operates in the rest of the UK. People start paying income tax on earnings over £11,850 in both Scotland and the rest of the UK. In Scotland, under the new regime, a starter rate of 19p has been introduced for people earning between £11,850 and £13,850 – in the rest of the UK these earners pay a 20p rate.

The basic 20p rate applies to earnings from £13,851 to £24,000, a new 21p intermediate rate applies between £24,001 and £43,430, a higher rate from £43,431 to £150,000 and an additional rate of 46p for earnings over £150,000 – in the rest of the UK this additional rate is 45p.

The IFS report said that 44 per cent of Scottish adults do not have earnings above the personal allowance and so are unaffected by these changes, whereas for those who do pay tax the changes will depend on how much they earn.

It added a further 31 per cent of Scots – specifically, those earning between £11,850 and £26,000 – will pay less income tax in Scotland than the rest of the UK, although the gain is small (up to a maximum of £20 per year). The total giveaway to this group is forecast to be £23 million.

It went on to say that a further 25 per cent of Scots earn above £26,000 and will now pay more in Scotland than they would in the rest of the UK. In total, these individuals are forecast to pay £380m more in tax, of which £250m is a result of the changes.

It added: “Losses are greater for those with higher earnings. For example, an individual earning £28,354 per year (the median full-time earner in Scotland) will have a £24 higher tax liability in Scotland compared to the rest of the UK, while an individual earning £170,000 per year (enough to place them in the top 1 per cent of UK income taxpayers) will have a tax liability over £2000 higher in Scotland.”

Responding to the IFS study SNP MSP George Adam said the Scottish Tories had been “caught out”.

“As the IFS have said, a clear majority of taxpayers in Scotland will pay less tax this year than last – with higher earners facing a modest increase, making Scotland both the lowest taxed and fairest taxed part of the UK,” he said.

“Scottish taxpayers also benefit from a significant social contract that sees everyone receive free university tuition, free prescriptions, free personal care for the elderly and the best performing NHS. The Scottish Tories are looking increasingly ridiculous as they get caught out again.”