PLEASE NOTE: The charity TaxAid advises only those people on low incomes whose problems cannot be resolved with HMRC.

Scottish Rate of Income Tax

Income Tax

The Scottish Rate of Income Tax was introduced from 6 April 2016. It applies to ‘Scottish Taxpayers’.

The rules on who is a Scottish Taxpayer have three main tests:

  • If your only or main home is in Scotland, you are a Scottish Taxpayer. To determine this, compare the time you had a home in each part of the UK (Scotland, England, Northern Ireland or Wales) separately. Holiday homes do not count as ‘homes’
  • If you have no base in the UK which could really be regarded as a ‘home’, then you will be a Scottish Taxpayer if you spend at least as many days in Scotland as elsewhere in the UK. (You must also be UK resident for tax purposes)
  • MPs for Scottish constituencies and MSPs are automatically Scottish Taxpayers

If you have more than one UK address, for example if you’re a student, work offshore or if you have moved about the UK, it may not be clear if you are a Scottish Taxpayer.

To help you decide if you are a Scottish Taxpayer, see https://www.gov.uk/scottish-rate-income-tax.

What should I do next?

For most people it will be straightforward to decide if you are a Scottish Taxpayer. If you agree with HMRC’s letter telling you that you are a Scottish Taxpayer, you don’t need to do anything now, but you should check that all your PAYE sources of income have the letter ‘S’ in front of the code. If you are in Self-assessment, you will confirm your Scottish Taxpayer status by ticking a box on the tax return.

Scottish Rates and Bands – 2018/19

The Scottish rates and bands for income tax from 6 April 2018 are set out below:

Scottish income tax rates 2018/19 Scottish income tax bands 2018/19
Scottish starter rate – 19% £11,851 – £13,850 (£2,000)
Scottish basic rate – 20% £13,851 – £24,000 (£10,150)
Scottish intermediate rate – 21% £24,001 – £43,430 (£19,430)
Scottish higher rate – 41% £43,431 – £150,000
Scottish top rate – 46% £150,001 and above

 

While Scottish taxpayers with earned income of less than £26,000 in 2018/19 will pay less income tax than taxpayers in the rest of the UK earning the same level of income, this tax reduction is relatively small, at a maximum of £20 for the year. Scottish taxpayers with earned income of more than £26,000 will pay more income tax than taxpayers in the rest of the UK earning the same level of income.