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Scottish Income Tax changes 2018/19 tax year

On 14 December 2017, the Scottish Government announced that, for the first time, it would use its Executive powers to make changes to the rates at which Scottish residents pay income tax.

The new tax rates affect only income taxpayers resident in Scotland and have no effect on any other part of the UK.

The changes are due to come into effect on 6 April 2018, for the 2018/19 tax year.

What are the changes?

In summary, the changes are due to affect the taxable income of Scottish residents as follows:

  • The ‘basic’ rate of income tax remains at 20p

  • A new Scottish ‘starter’ rate will be introduced, meaning earnings between £11,850 and £13,850 will be taxed at 19%

  • A new ‘intermediate’ rate of 21p will be introduced for those earning between £24,000 and £44,273

  • The ‘higher’ rate of income tax will be increased (by 1p) to 41p

  • The ‘top’ rate of income tax will be increased (by 1p) to 46p.

The Scottish Government believes that, combined, these changes mean Scottish residents earning under £26,000 each year will pay marginally less tax than elsewhere in the UK, while tax will not change for those earning less than £33,000 each year.

Who is a Scottish taxpayer?

HMRC will determine whether or not you’re a Scottish taxpayer based on your main place of residence. The Scottish rate of Income Tax is payable for the full year.

Anyone identified as a Scottish taxpayer will have an “S” prefix attached to their PAYE tax code.

Changes at a glance

Scottish BandsBand nameScottish Rate
Over £11,8501 – £13,850Starter19%
Over £13,850 – £24,000Basic20%
Over £24,000 – £44,273Intermediate21%
Over £44,273 – £150,0002Higher41%
Above £150,0002Top46%

1 Assumes individuals are in receipt of the Standard UK Personal Allowance.

2 Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

What to do if you’re a Crunch client

Our clients who are resident in Scotland need to be aware of these changes so they can estimate their tax liabilities going forward.

If you are resident in Scotland, even for part of the year, please ensure Crunch and HMRC have been notified. This will ensure you are paying tax correctly.

If you have any questions please contact your client manager.

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