Scottish Income Tax 2026 to 2027: technical factsheet
Technical factsheet explaining the proposed Scottish Income Tax rates and bands for 2026 to 2027, including how the changes affect different earners and how Scotland compares to the rest of the UK.
Scottish Income Tax 2026 to 2027: technical factsheet
- the Starter rate band limit will increase by 40.3%, and the Basic rate band limit will increase by 13.6%. This will increase the thresholds for paying both the Basic and Intermediate rate of tax by 7.4%
- this increase is significantly above inflation, which is around 3.8%, based on the Consumer Price Index from September 2025
- the Higher, Advanced and Top rate thresholds are assumed to be maintained at their current levels in cash terms until the end of the Spending Review period (2028 to 2029)
- the UK Government confirmed in the 2025 Autumn Statement that the UK-wide Personal Allowance will remain frozen at £12,570 and the Higher and Additional rate thresholds will remain frozen for a further three years, extending the freeze to the 2030 to 2031 tax year
- the Scottish Fiscal Commission (SFC) has forecast that Income Tax will raise £21.5 billion in Scotland in 2026 to 2027
The tax rates you pay in each band if you have a standard Personal Allowance of £12,570 are shown in Table 1.(1)
Table 1: Proposed Income Tax rates and bands
|
2025 to 2026 |
2026 to 2027 |
|||
|
Band |
Rate |
Band |
Rate |
|
|
Starter |
£12,571* - £15,397 |
19% |
£12,571*- £16,537 |
19% |
|
Basic |
£15,398 - £27,491 |
20% |
£16,538 - £29,526 |
20% |
|
Intermediate |
£27,492 - £43,662 |
21% |
£29,527 - £43,662 |
21% |
|
Higher |
£43,663 - £75,000 |
42% |
£43,663 - £75,000 |
42% |
|
Advanced |
£75,001 - £125,140** |
45% |
£75,001 - £125,140** |
45% |
|
Top |
Over £125,140 |
48% |
Over £125,140 |
48% |
*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.
Figure 1: Expected number and proportion of Scottish taxpayers by marginal rate, relative to Scottish adult population, 2026 to 2027
Impact on individual taxpayers of changes to Scottish Income Tax
- it is estimated that over 32% of Scottish adults (around 1.5 million out of 4.7 million adults) are not affected by the 2026 to 2027 policy changes as their income is below the UK-wide Personal Allowance of £12,570
- a further 7% (around 330,000) Starter rate taxpayers with income below the Basic rate threshold are also unaffected
- no taxpayer will pay more Scottish Income Tax in 2026 to 2027 than they did in 2025 to 2026 on their current income
Majority of taxpayers pay less income tax in Scotland than in rest of UK
- the Scottish Government committed to ensuring that more than half of taxpayers in Scotland continue to pay less than in the rest of the UK, as set out in the Tax Strategy published in December 2024.
- based on the forecasts of the independent Scottish Fiscal Commission. those earning less than around £33,500 – which is expected to be around 55% of Scottish taxpayers – will pay slightly less Income Tax in 2026 to 2027 than if they lived elsewhere in the UK.
- once deductions such as pension contributions are taken into account – providing a more accurate picture of taxpayers’ actual liabilities – the proportion of Scottish taxpayers who are set to pay less than in the rest of the UK is expected to be around 57% (2)
The impact of Income Tax policy in 2026 to 2027 on different taxpayers can be considered by comparing take home pay in 2026 to 2027 to a scenario where all tax bands are increased in line with inflation, which is the SFC’s baseline assumption in the absence of policy changes.
This is illustrated in the table below alongside a comparison of take-home pay resulting from Scottish Income Tax policy compared to the rest of the UK in 2025-26. For a given income, the table below shows:
- the impact of Income Tax policy in 2026 to 2027 relative to a baseline assuming a baseline where all bands increase with inflation.
- the impact of Income Tax policy in 2026 to 2027 compared to Income Tax policy in 2025-26.
- the impact of Scottish Income Tax policy in 2026 to 2027 compared to Income Tax policy in the rest of the UK.
For example, in 2026 to 2027 taxpayers earning the median income of around £31,136 will be around £24 better off than if they lived elsewhere in the UK and around £32 better off in 2026 to 2027 than they were in 2025 to 2026. They will also be around £25 better off than if all Income Tax bands had increased by inflation.
Table 2: Impact on take home pay of 2026 to 2027 policy decisions
|
Example Income of Scottish taxpayers in 2026 to 2027 |
|||
|
Policy impact relative to inflation uprating(3) |
Position relative to tax paid in 2025 to 2026 |
Position relative to the rest of the UK in 2026 to 2027 |
|
|
£15,000 |
£0 |
£0 |
£24 |
|
£20,000 |
£10 |
£11 |
£40 |
|
£20,350 (25th percentile) |
£10 |
£11 |
£40 |
|
£25,782(4) (Real Living Wage) |
£10 |
£11 |
£40 |
|
£31,136 (Median Income) |
£25 |
£32 |
£24 |
|
£35,000 |
£25 |
£32 |
-£15 |
|
£40,000 |
£25 |
£32 |
-£65 |
|
£45,000 |
-£222 |
£32 |
-£396 |
|
£46,300 (75th percentile) |
-£222 |
£32 |
-£682 |
|
£50,000 |
-£222 |
£32 |
-£1,496 |
|
£60,000 |
-£222 |
£32 |
-£1,750 |
|
£70,000 |
-£222 |
£32 |
-£1,950 |
|
£80,000 |
-£293 |
£32 |
-£2,300 |
|
£90,000 |
-£293 |
£32 |
-£2,800 |
|
£100,000 |
-£293 |
£32 |
-£3,300 |
|
£130,000 |
-£435 |
£32 |
-£5,331 |
|
£800,000 |
-£435 |
£32 |
-£25,431 |
Impact of Income Tax changes on Scottish households
- Income Tax changes further increase progressivity in 2026 to 2027. Lower-income households gain slightly from higher Basic and Intermediate rate thresholds, while higher-income households see reduced income due to the freeze on higher-rate thresholds.
- overall, around 62% of households in Scotland are better off or unaffected under Scotland’s system compared with the rest of the UK, with the average household paying more in income tax but receiving more in social security
Impact of policy decisions on average household incomes in 2026 to 2027 by household income decile, as a proportion of income
1. This presentation is different to the draft SRR, which presents rates applying to bands of income above an individual’s personal allowance. For instance, the Higher rate threshold in the SRR is shown as applying to income over £31,092 (as £31,092 plus the standard personal allowance of £12,570 equals £43,662).
2.Scottish Government analysis based on the latest Scottish Fiscal Commission forecasts.