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Income taxes in Scotland

If you live in Scotland, you'll pay income tax under a slightly different system to the rest of the UK. We explain how the Scottish Rate of Income Tax will affect you. 

In this article
Scottish income tax rates 2018-19 Scottish Rate of Income Tax 2017-18 Who pays the Scottish Rate of Income Tax? How to pay Scottish income tax

People in Scotland paying different taxes to the rest of the UK since the 2017-18 tax year.

This change comes as Scotland has been given new powers to control how much revenue it can generate.

In this article, Which? explains what those changes mean for you. You can jump to the section you want using the links below.  

Get a head start on your 2017-18 tax return with the Which? tax calculator. Tot up your tax bill, get tips on where to save and submit your return direct to HMRC with Which?.

Scottish income tax rates 2018-19

The Scottish Rate of Income Tax changed in April 2018. 

The table below outlines the Scottish rates and bands for the 2018-19 tax year.

Scottish income tax bands from April 2018
Tax rate

Earnings

Rates (%)

Starter rate Over £11,850*-£13,850 19
Basic rate Over £13,850-£24,000 20
Intermediate rate Over £24,000-£43,430 21
Higher rate Over £43,430-£150,000** 41
Top rate Above £150,000** 46

*Assumes person is in receipt of the standard UK personal allowance

**Personal allowance is reduced by £1 for every £2 earned over £100,000

Under these new tax bands, it's claimed that 55% of Scottish taxpayers pay less than if they were to live elsewhere in the UK, and 70% pay less than they did in 2017-18. 

The changes mainly benefit lower earners.

Due to the introduction of the new Starter Rate band, along with the increase in personal allowance throughout the UK (which is £11,850), the Scottish government states that every Scottish taxpayer earning less than £33,000 in 2018-19 pays less income tax than they did in 2017-18, for a given level of income.

Higher earners, however, have a 1% increase to their income tax bill, and those earning more than £100,000 also have their personal allowance reduced by £1 for every £2 earned over £100,000. 

This means that someone earning £110,000 has their Personal Allowance reduced by £5,000, bringing it down to £6,850. They are therefore be liable to pay tax on a larger proportion of their income, as well as paying at a higher tax rate.

Scottish Rate of Income Tax 2017-18

Last tax year, 10% of the tax Scottish residents paid on their income – called the Scottish Rate of Income Tax - was sent directly to the Scottish government.

Scottish residents also paid a lower UK rate, but their overall tax rate was the same as other residents in the UK.

Scottish tax rates 2017/18
Tax rate

Scottish rate of 

income tax

UK rate paid

in Scotland

Overall income

tax rate

Basic rate (20%) 10% 10% 20%
Higher rate (40%) 10% 30% 40%
Additional rate (45%) 10% 35% 45%

Who pays the Scottish Rate of Income Tax?

If your main home is in Scotland, you will pay the Scottish Rate of Income Tax. If you move homes, either to or from Scotland, you will pay the Scottish Rate if you live in Scotland for more than half of the year.

Taxes for people with multiple properties are dependant on your main home, where you live and where spend most of your time.

Your main home might be one where you spend less time if:

  • That’s where your family lives, if you are married or in a civil partnership
  • That’s where most of your property is
  • That’s where you’ve registered for things such as your GP, car insurance or your bank account

How to pay Scottish income tax

If you complete your own self-assessment tax return, there will be a box on your tax return you need to select to indicate that you pay the Scottish rate. 

If you pay taxes on earnings or a pension through a Pay As You Earn scheme (PAYE), your tax code will begin with an S.

Find out more: Understanding your tax code - understand how much you will earn before paying tax.