Scottish Tax Changes

The Scottish government has approved an overhaul of the Scottish income tax system, which will introduce new rates and bands from 6 April 2018.

Under the new system, most taxpayers in Scotland will fall into one of 5 income tax bands, following the introduction of 2 new bands either side of the basic rate.

The new bands due to be added are a starter rate of 19p for those earning between £11,851 and £13,850, and an intermediate rate of 21p for earnings between £24,001 and £44,430.

Members of the Scottish parliament voted in favour of the proposals, which were drafted in December’s Scottish Budget 2017, by 67 votes to 50.

Finance secretary Derek Mackay said 70% of taxpayers in Scotland will pay less income tax as a result of the reforms.

Mackay said:

Our progressive approach to reforming income tax will deliver greater tax fairness and protect the lowest earning taxpayers in Scotland.

Scottish Bands Taxable Income 2018/19 Rate Taxable Income 2017/18 Rate
Personal Allowance Up to £11,850 0% Up to £11,500 0%
Starter Rate £11,851* to £13,850 19% N/A N/A
Basic Rate £13,851 to £24,000 20% £11,501 to £43,000 20%
Intermediate Rate £24,001 to £44,430 21% N/A N/A
Higher Rate £44,431 to £150,000** 41% £43,001 to £150,000 40%
Top Rate £150,001+ 46% £150,001+ 45%

*Assumes individuals are in receipt of the personal allowance.

**Those earning more than £100,000 will see their personal allowance reduce by £1 for every £2 earned over £100,000.

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