THE TREASURY has knocked back Nicola Sturgeon’s request to make the new one-off £500 "thank you payment" for NHS heroes tax free. 

Details of the bonus were announced by the First Minister on Monday at the SNP’s annual conference.

Every full-time NHS staff member and adult social care worker in the country will be eligible.

The pro-rata £500 bonus scheme will be funded from the Scottish Government's Covid-19 support package and applies to employees employed since March 17.

However, while the Scottish Government can make the payment, they don’t have powers over taxes to make it tax-free. 

In her speech, the First Minister urged the Prime Minister to act.

“The Scottish Government is choosing to do this now from our own resources. We are asking nothing of the UK government - with one exception.

“Because we don’t control the full tax and benefits system, we don’t have the power to make this payment tax free. But Prime Minister, you do.

“So I am asking you this: Please allow our health and care heroes to keep every penny of Scotland’s thank you to them. Do not take any of it away in tax.”

Last night the Treasury said no, telling Sturgeon that if she wanted the payment to be tax free that she would then need to pay the tax. 

A spokesman pointed out that any income tax levied would ultimately be collected by the Scottish Government.

He said: “We provided over £8.2bn of extra funding for the Scottish Government this year to support people, businesses and public services. The income tax on these payments is paid to Scotland, not Westminster – and the Scottish government has the powers and funding to cover the tax owed on the payment if it wishes.”

The SNP MSP Tom Arthur said it wrong to say the tax went to Edinburgh. Rather, he added, It is collected by HMRC at rates set by the Scottish Parliament and goes into Treasury coffers. When the total take is known, about 18 months after the end of the tax year, it is measured against original forecast and any difference is reconciled.

He tweeted: “Income tax is generally reserved under the Scotland Act by virtue of Schedule 5. Section 80C allows only for the Scottish Parliament to set rates for one tax year at a time. Power for exemptions is reserved. Are the Tories really going to pick the pockets of health care workers?”

The SNP’s Westminster leader described the Treasury’s position as appalling. 

“The Tory treasury appears to be rejecting the Scottish Government's plea to lift its tax on @NicolaSturgeon's £500 'Thank You' payment to NHS & social care workers.

“@BorisJohnson must order an immediate U-turn on his bid to punish NHS and care workers.”