New Scottish Income Tax Rates and Bands

From 6 April 2018, new Scottish income tax rates and thresholds will apply:

 

Income (£)

Name

Rate (%)

Below £11,850* N/A 0
£11,850** – £13,850 Starter 19
£13,851 – £24,000 Basic 20
£24,001 – £44,273 Intermediate 21
£44,274 – £150,000*** Higher 41
Above £150,000*** Top 46

 

*No tax is payable on income below the Standard UK Personal Allowance, which is set by the UK Government.

**Assumes individuals are in receipt of the Personal Allowance.

***Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

 

How do the income tax proposals stack up?

 

Earnings

Scottish Tax Liability in 2018/19

Difference in Scotland between 2017/18 and 2018/19

Difference with rest of UK for 2018/19

£15,000 £610 £90 more in your pocket in 2018 Scots £20 better off
£24,000 £2,410 £90 more in your pocket in 2018 Scots £20 better off
£26,000 £2,830 £70 more in your pocket in 2018 – due to UK personal allowance increase Scots no better or worse off
£30,000 £3,670 £30 more in your pocket in 2018 Scots £40 worse off
£33,000 £4,300 No difference Scots £70 worse off
£60,000 £13,115 £15 less in your pocket in 2018 Scots £755 worse off
£90,000 £25,415 £315 less in your pocket in 2018 Scots £1,055 worse off

 

Who is liable to Scottish Income Tax?

A Scottish taxpayer is anyone who is a UK taxpayer and has their main place of residence in Scotland.

If you have places of residence both in Scotland and elsewhere in the UK, a variety of factors will be taken into account in judging where your main residence is. These include where your spouse and/or children live, where you are registered to vote, where you hold club memberships, in addition to where you spend the majority of your time.

 

Is all my income liable to Scottish Income Tax? 

No, Scottish Income Tax only applies to “Non Savings/Non Dividend Income”.

As a result, Scottish Income Tax is payable on earnings from employment, self-employment, pensions and rental profits, but income tax due on savings and dividends continues to be set by and paid to the UK Government.

Therefore, if you own shares in a company which pays dividends, or have significant investment income, you will be liable to a combination of both Scottish and UK income tax.

 

Will I pay more than before? 

Whether you pay more income tax depends upon your individual circumstances, including the different types of income you receive as well as the level of your income overall.

In broad terms;

No, if you earn less than £33,000 per annum you will pay the same or less tax than you would otherwise.

Yes, if you earn above £33,000 you will pay more tax than you would do living elsewhere in the UK.

 

Please keep up-to-date with our blogs. We will share examples of the impact of these changes in the coming months.