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On 14 December 2017, the Finance Secretary, Derek MacKay, presented the Scottish Draft Budget for 2018/19 and stated his intention to introduce new rates and bands of income tax for Scottish taxpayers.

Whilst leaving the 20% Basic rate intact, MacKay intends to introduce a 19% Starter and a 21% Intermediate rate, as well as to increase the Higher and Additional rates by 1%, to 41% and 46% respectively.

For 2018/19, the rates and tax bands applicable to Scottish taxpayers on non-savings and non-dividend income will be:

Scottish Bands Band name Scottish Rates
Over £11,850* - £13,850 Starter 19%
Over £13,850 - £24,000 Basic 20%
Over £24,000 - £44,273 Intermediate 21%
Over £44,273 - £150,000** Higher 41%
Over £150,000** Top 46%

* when the individual is entitled to a full UK personal allowance.

** reduced personal allowance if an individual’s adjusted net income is above £100,000. The allowance is reduced by £1 for every £2 of income over £100,000.

In 2018/19, Scottish taxpayers with an income of £26k from employment, will pay the same amount of income tax as the rest of the UK. In terms of higher earners – those with a £150k salary or higher – Scottish taxpayers will pay £1.7k more income tax than the rest of the UK.

Whilst we respect completely the right of the Scottish Government to set its own tax rates, an unfortunate by-product of these changes will be that tax in the UK will only get more complicated. Please speak with us if you would like to learn more about how these rates could impact you.