What are the 2018/2019 Scottish Income Tax Rates?

The 2016 Scotland Act includes articles that give the power to set all income tax bands and rates to the Scottish Parliament. This does not apply to income from savings or dividends.

It is not considered a devolved power because Scottish income tax is still under the umbrella of the wider UK income tax system. HMRC are still responsible for collecting and administering Scottish income tax, making the corresponding payment to the Scottish Government.

2018/2019 Scottish Income Tax Rates

Starter Rate 19 £11,850 – £13,850
Basic Rate 20 £13,850 – £24,000
Intermediate Rate 21 £24,000 – £44,273
Higher Rate 41 £44,273 – £150,000
Top Rate 46 Over £150,000

Who pays Scottish Income Tax rates?

You will pay Scottish Income Tax rates if you are considered a Scottish taxpayer. This is decided by HMRC and is largely based on where your main home is (residency).

Do Scottish Taxpayers still get the UK Personal Allowance?

Yes, all Scottish taxpayers receive the full UK Personal Allowance, apart from the Top Rate.  If you are in the Top Rate band, your Personal Allowance is reduced by £1 for every £2 you earn over £100,000.

Your tax code

Your tax code will be changed in accordance with the new income tax rates meaning you can pay more or less tax than the tax year before. You should be notified by the tax office what your new tax code will be before the start of the tax year either by post or online.

Why have the Scottish Government decided to make changes to their Income Tax bands and rates?

This is an important question. It is answered at the top of the Fact Sheet which accompanies their draft Budget proposal:

“Strong public services are vital for a thriving economy.  However, continued cuts to our budget by the UK Government mean that in 2019-20 our fiscal budget allocation for day to day spending will be £200 million lower in real terms than it is this year.  In the Draft Budget the Scottish Government has outlined proposals for changing the rates and bands of income tax in Scotland to raise an additional £164 million to enable the Scottish Government to fulfil our commitments to the NHS without having to reduce spending in other areas. In 2018/19, Scottish income tax receipts are forecast to raise £366m more than the corresponding block grant adjustment.”

Whilst it does mean that some Scottish taxpayers will pay more than the previous tax year and other parts of the UK, it is calculated that 55% of Scottish income tax payers will be paying less than if they lived in England, Wales or Northern Ireland. This is mainly because the 1.4million Scottish taxpayers who earn less than £26,000 will pay a bit less in the 2018-19 tax year.

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