A growing number of Scottish workers are choosing to live in England while commuting north for work, as widening differences in income tax rates make living south of the border increasingly attractive. Tax advisers and estate agents say professionals working in sectors such as healthcare, finance and consultancy are relocating to towns including Berwick-upon-Tweed, Cornhill-on-Tweed and Carlisle, allowing them to benefit from lower English income tax rates while continuing to work in Scotland. Under current tax rules, a person’s income tax liability is determined by where they live, not where they work.
How the tax difference works
Since powers over income tax were devolved to Holyrood, the Scottish Government has introduced a series of tax changes that have created significant differences from the rest of the UK. Scotland now operates six income tax bands, including:
- 19% Starter Rate
- 20% Basic Rate
- 21% Intermediate Rate
- 42% Higher Rate from £43,663
- 45% Advanced Rate above £75,000
- 48% Top Rate on earnings over £125,140
In England, Wales and Northern Ireland, the higher rate remains 40% from £50,270, with a 45% additional rate applying above £125,140. The differences mean:
- Someone earning £50,000 pays around £1,500 more in income tax each year in Scotland than they would if resident in England.
- At £100,000, the gap increases to around £3,300 annually.
- For incomes above £125,000, the difference exceeds £5,000 and continues to rise.
Why workers are relocating
Because Scottish taxpayer status depends entirely on a person’s main residence, professionals can legally pay English tax rates while working in Scotland simply by living across the border. Estate agents in Northumberland say tax has become an increasingly common reason buyers are choosing homes in northern England, alongside lower property prices and fast rail links to Edinburgh. Berwick-upon-Tweed, just over two miles from the Scottish border, has become particularly popular because trains reach Edinburgh in around 40 minutes.
Property taxes also play a role
The financial advantages are not limited to income tax. Scotland’s Land and Buildings Transaction Tax (LBTT) is generally higher than Stamp Duty in England on more expensive homes. Buyers of second homes in Scotland also face an 8% Additional Dwelling Supplement, adding to the cost of purchasing property.
Migration picture is mixed
Despite concerns over higher taxes, official analysis suggests the overall picture is more nuanced. Research by HM Revenue & Customs and the Scottish Government found Scotland has continued to experience net inward migration of taxpayers overall since tax powers were expanded. However, among those earning more than £100,000, the trend has reversed, with a small but consistent net outflow since 2018–19. Although only hundreds of high earners move each year, economists note they contribute a disproportionate share of Scotland’s income tax revenues.
Experts warn of behavioural changes
The Scottish Fiscal Commission has already factored behavioural responses into its tax forecasts, suggesting higher tax rates generate less revenue than simple calculations would predict. Economists say responses include:
- Relocating across the border.
- Increasing pension contributions.
- Incorporating businesses, as dividend tax remains reserved to Westminster.
- Reducing working hours or changing remuneration structures.
Both the Institute for Fiscal Studies and the Fraser of Allander Institute have previously suggested Scotland may be approaching the point where further tax rises on higher earners would generate diminishing returns.
Political divide continues
The Scottish Government has defended its tax policy, arguing higher earners contribute more to help fund public services including:
- Free university tuition.
- Free NHS prescriptions.
- The Scottish Child Payment.
Ministers have also pointed out that many lower earners pay slightly less income tax than comparable workers elsewhere in the UK. Critics, including opposition parties, business groups and employers in sectors such as finance, medicine and law, argue the growing tax gap is making Scotland less competitive when recruiting senior professionals. Following debate during the run-up to the 2026 Holyrood election, the Scottish Government indicated that further tax divergence would be paused, with the 2025–26 Budget freezing tax rates while increasing some thresholds.
