Scottish income tax shake-up - how what you pay will change
The Scottish Government has announced changes to income tax bands which could see some middle earners pay more tax from next April.
The draft Scottish Budget for 2018/19, introduced by Finance Secretary Derek Mackay on Thursday, sets out plans to increase the total number of income tax bands from three to five.
Under the changes some basic-rate taxpayers will pay less, but those earning about £33,000 or more are likely to pay more. Someone earning £40,000 is likely to pay an extra £140 a year.
The new rates apply to anyone who lives in Scotland.
The Scottish Government was given the power to set income tax rates and bands last year, and the new rates proposed by Mackay will now have to be voted on by the Scottish Parliament in the New Year.
How are Scottish income tax rates changing?
Here's the full detail of the changes:
Income tax bands in Scotland
| Tax band | Current threshold | Current rate | Proposed threshold from April | Proposed rate from April | |
|---|---|---|---|---|---|
| Personal allowance | Up to £11,500 | 0% | Up to £11,851 (1) | 0% | |
| Basic rate | £11,501 to £43,000 | 20% | £11,851(1) to £13,850 | 19% | |
| £13,851 to £24,000 | 20% | ||||
| £24,001 to £44,273 | 21% | ||||
| Higher rate | £43,001 to £150,000 | 40% | £44,274 to £150,000 (2) | 41% | |
| Additional rate | Over £150,000 | 45% | Over £150,000 (2) | 46% | |
| 1) Assumes individuals are in receipt of the standard UK personal allowance. 2) Those earning more than £100,000 will also see their personal allowance reduced by £1 for every £2 earned over £100,000. | |||||
'No-one earning less than £33,000 will pay more'
In his Budget speech, Mackay said the changes would "make Scotland's income tax system even fairer and more progressive".
He added: "I can announce today that I will introduce a new Scottish 'starter' rate of income tax of 19p.
"This new rate will apply to the first £2,000 of taxable income – between £11,850 and £13,850.
"The new 'starter' rate, combined with the increase in the personal allowance, will ensure that no-one earning less than £33,000 – which is 70% of all taxpayers – will pay any more in tax than they do now for given incomes."
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22 April 2025
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