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Scottish income tax

Scottish income tax 2017/18

Scotland Act 2016 builds on the devolution of income tax powers provided for in Scotland Act 2012.  For the first time the Scottish Parliament has the power to set all income tax rates and bands (except the personal allowance, which remains reserved) that will apply to Scottish taxpayers’ non-savings, non-dividend (NSND) income for tax year 2017/18. While the Scottish Parliament has the power to set the Scottish income tax rates and bands HMRC will continue to be responsible for its collection and management.  As such Scottish income tax remains part of the existing UK income tax system and is not a devolved tax.  Information about the Scottish Rate of Income tax for tax year 2016/17 is available.

How the Scottish income tax works

From April 2017, the income tax rates and bands payable by Scottish taxpayers will be those set by the Scottish Parliament.  The Scottish rates and bands will then be set annually by the Scottish Parliament. 

Receipts from Scottish income tax will be collected by HMRC and paid to the Scottish Government (via HM-Treasury).

You are either a Scottish taxpayer, or not, for the full tax year if liable to pay income tax in the UK.

Scottish rates and bands for 2017/18

On the 21 February the Scottish Parliament voted to to freeze the basic rate of income tax of 20 per cent, also freeze the higher and additional rates at 40 per cent and 45 per cent respectively, and maintain the higher rate of income tax threshold at £43,000 in 2017/18, as set out in the table below.  

 

Scottish income tax rates

Scottish bands

Scottish Basic rate 20%

Above £11,500* up to £43,000

Scottish Higher rate 40%

Above £43,000 up to £150,000

Scottish Additional Rate 45%

Above £150,000**

 

* Assumes person is in receipt of the Standard UK Personal Allowance

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

Who is a Scottish Taxpayer?

Scottish income tax is only payable by Scottish taxpayers. HMRC will determine whether or not you are a Scottish taxpayer based on where your main place of residence is.  HMRC need to know if you have changed your address - Details about how you can tell HMRC about a change of address.

More Information

The Scottish Government's income tax policy forecasts are availalble here.

The Scottish Government's analysis of the impact of increasing the additional rate from 45p to 50p is availalble here.