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Scottish Income Tax Overview

by | Feb 22, 2018 | News, Tax

Ever since the setting of income-tax laws was officially devolved to the Scottish Parliament in 2016, it was widely expected that changes to the Income Tax system would follow shortly afterwards.

The Scottish Finance Secretary Derek Mackay set out those proposals in his draft budget on 15th December of that year.  These changes came into effect for the 2017/18 tax year.

Prior to the 2017/18 tax year, all Income Tax rates and allowances between the two governments were harmonised making it straightforward to calculate tax liabilities irrespective of whether you lived in Scotland or the rest of the UK.

However, commencing from 6th April 2017, Scottish tax residents now have a different tax band.  The amount when the higher rate tax kicks in have been reduced to £43,000 for Scottish taxpayers, compared to £45,000 for the rest of the UK.

How do I know if I am a Scottish taxpayer?

This will depend on where your main residence is e.g. where you live the majority of the time. If this is a Scottish address, then you are likely to be a Scottish taxpayer. Your taxpayer status will be for a whole tax year, it cannot be split for part of the tax year.

Further Taxation changes afoot

The Scottish Budget statement released in December 2017 introduced two new income tax brackets whilst increasing its top tax rate to 46p in the pound.

For the 2017/18 tax year, Scottish tax payers will pay tax on the following basis:

  • Earnings up to £11,500 – tax free based on personal allowance
  • Earnings from £11,501 to £43,000 – taxed at 20%
  • Earnings from £43,001 to £150,000 – taxed at 40%
  • Earnings of £150,001 and over – taxed at 45%


However, from 6 April 2018, this will be changing to the following:

  • Earnings up to £11,850 – tax free based on personal allowance
  • Earnings from £11,851 to £13,850 – taxed at 19%
  • Earnings from £13,851 to £24,000 – taxed at 20%
  • Earnings from £24,001 to £44,273 – taxed at 21%
  • Earnings from £44,274 to £150,000 – taxed at 41%
  • Earnings of £150,001 and over – taxed at 46%


The result of the changes will mean that approx. 70% of all Scottish taxpayers earning under £33,000 per annum will pay less in tax than their counterparts within the rest of the UK.

If you are unsure about which Income Tax system you might be caught in or want further information about how the changes might affect you, why not contact Clever Accounts for further information.

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