THE widening income tax gap between Scotland and England is set to backfire and spur more people to tax avoidance, Scotland’s leading accountancy body has warned.

The Institute of Chartered Accountants in Scotland (Icas) said the different rates across the border would make legal “tax mitigation strategies” more attractive for high earners, depressing expected tax receipts.

The warning for Finance Secretary Derek Mackay is the latest to follow Monday’s budget, in which Chancellor Philip Hammond raised the threshold for the 40p higher rate of income tax in England to £50,000 next year.

In Scotland, the higher rate threshold (HRT) is currently £43,430 and the rate is 41p.

Nicola Sturgeon has ruled out copying the Chancellor, calling his tax plans “shameful”.

Independent research by the Scottish Parliament also found raising the HRT to £50,000 in Scotland would mean up to £410m less being raised for public services.

However the issue has been seized on by the Scottish Tories to attack the Nationalists.

Acting Tory leader Jackson Carlaw will today claim the higher income tax in Scotland is deterring skilled workers from the north east and helped the Tories replace the SNP there.

The SNP Government publishes its draft budget for 2019/20 on December 12, and is not expected to raise the HRT by any more than inflation, meaning a rise to £44,539 at most.

In that scenario, middle class Scots would pay £1100 more than their English counterparts simply because of the HRT difference.

However the Fraser of Allander Institute this week said the Scottish Greens, who helped the SNP pass their last two budgets, might push for another freeze in the HRT: “If so, the difference in tax liabilities between Scottish and rUK taxpayers would increase further still.”

In its assessment of the Budget measures, Icas raised “the widening differentials” between the point at which 41% tax becomes payable in Scotland and 40% in England.

Tax experts Charlotte Barbour and Justine Riccomini wrote: “Care may also be needed if the [SNP’s] 2018/19 strategy on rates and bands for higher earners is continued or extended. It already produces higher tax bills for higher earners in Scotland than in the rest of the UK and any extension of this approach may lend itself to tax mitigation strategies.

“The wider the differentials, the more attractive tax planning may become.”

The Fraser of Allander said that, even if the SNP raised the thresholds for all Scottish tax bands by inflation next year, a Scottish taxpayer earning £45,000 would pay £290 more in tax than an English counterpart, while a Scot on £50,000 would pay over £1,300 more.

Speaking at the Scottish Conservatives’ North East Conference today, Mr Carlaw will say the SNP has “lost touch” with the area over Brexit and the fishing industry.

He will call the SNP’s reaction to the Budget had been “bizarre” and “bordering on the petulant”, with no acknowledgement of the freeze in whisky duty and oil taxes.

He will say of the Nationalists: “On fishing, their big plan is for us to stay in the CFP.

“It all points to one conclusion: the SNP has simply lost touch with the north east.

“Whatever else you may have thought of them, [former SNP] politicians like Alex Salmond and Angus Robertson at least knew their patch. By contrast, when it comes to the concerns of people and businesses the North East, Nicola Sturgeon has been posted missing.

“Her only bright idea being to force skilled workers here to pay an extra £1000 a year in tax compared to people working in other parts of the UK. The SNP has given up on the North East of Scotland. The Scottish Conservatives are now the party of the North East.”

The Tories currently have five MPs and five MSPs in the North East, and help run Aberdeen and Aberdeenshire councils.

Kirsty Blackman, SNP MP for Aberdeen North, said: “This is unadulterated drivel from Tories who have treated the North East as a cash cow for decades while giving nothing back. Everyone knows the Tories are gearing up to sell out Scottish fishermen once again. And when they do, David Mundell’s position [as Scottish Secretary] will be untenable.”

A Scottish Government spokesman said: “Following the changes earlier this year, more than two-thirds of taxpayers will pay less this year on given incomes compared to last year.

“An additional £428m is being invested in schools, hospitals and the economy this year. The Finance Secretary will present the Government’s tax plans in the Scottish budget.”