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The Scotland Act 2016 provides the Scottish Parliament with the power to set the Income Tax rates and bands that will apply to Scottish taxpayers' non-savings, non-dividend income for the tax year 2021 to 2022. Responsibility for setting the tax-free Personal Allowance, and reliefs and exemptions, remains reserved to the UK Parliament. Income Tax on savings and dividend income is also reserved and continues to be paid to the UK Government. Therefore, Scottish Income Tax remains part of the UK Income Tax system and is not a fully devolved tax.
How Scottish Income Tax works
The Income Tax rates and bands payable by Scottish taxpayers are set by the Scottish Parliament. Receipts from Scottish Income Tax are collected by HMRC and paid to the Scottish Government (via HM Treasury).
Scottish rates and bands for 2021 to 2022
On 25 February 2021 the Scottish Parliament set the following Income Tax rates and bands for 2021 to 2022, which will take effect from 6 April 2021.
The UK Government confirmed at its Budget on 3 March 2021 that the UK-wide Personal Allowance will increase to £12,570 in 2021 to 2022.
Over £12,570* - £14,667
Over £14,667 - £25,296
Scottish Basic Rate
Over £25,296 - £43,662
Over £43,662 - £150,000**
* assumes individuals are in receipt of the Standard Personal Allowance.
** those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.
The attached documents include:
a note on the distributional impact of the Scottish Government’s Income Tax policy choices over this Parliament (2016 to 2017, to 2021 to 2022)
a factsheet on the changes made to Scottish Income Tax for 2021 to 2022
an explanatory note on the Scottish Rate Resolution
a note showing the estimated revenue impact of illustrative changes to Scottish Income Tax policy in 2021 to 2022