By Zack McJimpsey

Rachel Reeves announces new government budget (Image: Unsplash)

After the chancellor unveiled her budget yesterday, with some powers being devolved to the Scottish Parliament, what impact will this have north of the border?

1. INCOME TAX

While the income tax rates and levels are set in Scotland the level in which you start to pay tax is still set by Westminster. This means as wages increase with inflation it will drag more low earners and part-time workers into paying tax.

However, the freeze in the tax thresholds where workers start to pay additional levels of tax will not affect Scotland. The Finance Secretary Shona Robinson will now have to decide if she wants to replicate the decision in Scotland when she delivers her Scottish Budget to Parliament on January 13, 2026.

National Insurance (NI) however is set by the UK government, so the freeze to National Insurance thresholds will lead to Scottish workers paying more tax in future.

Rachel Reeves claims that the Scottish government will receive a further £820 million over the next three to four years. But Shona Robinson said: “The increase in funding for the Scottish Government will not even cover half the cost of the employer’s National Insurance contributions brought in this year.”

2. MINIMUM WAGE

One of the most wildly felt impact of the budget is going to be the increase of the minimum wage for all workers and apprentices no matter what age they are.

For those under 18 the rise will be 6% from £7.55 to £8.00. Those aged between 18-20 will be getting the largest rise 8.5% from £10.00 to £10.85 and for those over the age of 21 they will get the smallest rise of around 4.1% from £12.21 to £12.71.

This comes as the UK government moves to a single minimum wage for everyone over the age of 18.

3. OIL AND GAS SECTOR

The budget also contained a relaxation on the rules against new oil and gas exploration in the North Sea. This has been relaxed to allow new drilling if it can be argued that it is an expansion of an existing field. The concession comes after hard lobbying by the sector in the run up to the budget. The main concern within the sector is the level of taxation. The energy profits levy also known as the windfall tax was introduced after the price surge following the invasion of Ukraine. This means that producers are paying 78% tax on profits even though wholesales rates have fallen over recent years. The levy is due to lust until at least 2030.

4. LOCAL INVESTMENT

The chancellor's speech also included money for projects across Scotland. Including £14.5 million for Grangemouth to help support industrial projects that can create new jobs in low carbon technologies. The site was home to Scotland's only crude oil refinery but closed in April.

A £1.5 million report known as Project Willow has come up with nine low carbon ideas for the site dependant on private investment

Another announcement was for £20 million to help renew the dry dock at Inchgreen in Greenock, Inverclyde. Which hasn’t rarely been used in over a decade. The site owned by Peel Ports has been claimed to create up to 1,750 jobs.

As well as £20 million for the regeneration of Kirkcaldy Town Centre and Seafront.

Four impacts the budget will have on Scotland