The Scottish Government has operated a different income tax regime compared to the rest of the UK since the 2018/19 tax year. This means anyone resident in Scotland pays different rates of income tax, using more bands and thresholds compared to the rest of the UK.
On 12th December 2018, the Scottish Finance Secretary, Derek Mackay, set out the Scottish Executive’s plans for tax and spending for the next tax year. The plans have not yet been approved by the Scottish Parliament, but a vote on the Finance Bill is expected in February 2019.
Importantly, the Scottish Executive has decided certain tax changes announced in Phillip Hammond’s October 2018 budget, will not be fully implemented in Scotland. The Scottish income tax rates, bands, and thresholds for the 2019/20 tax year, and the previous year are shown below.
Scottish Income Tax Rates and Thresholds and changes for 2019/20
||2018/19 tax year
||2019/20 tax year
|| Bands and Thresholds
||£11,850 – £13,850
||£12,500* – £14,549
||£13,851 – £24,000
||£14,550 – £24,944
||£24,001 – £44,273
||£24,945 – £43,430
||£44,274 – £150,000
||£43,431 – £150,000
The above table assumes the individual is receiving the Personal Allowance for tax-free income of £12,500 for the 2019/20 tax year (£11,850 in 2018/19). The Personal Allowance is reduced by £1 for every £2 earned over £100,000. This is the same as the rest of the UK.
Background to Scottish tax rate changes
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 rates affect only income taxpayers resident in Scotland and have no effect on any other part of the UK. The changes came into effect on 6th April 2018, for the 2018/19 tax 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.
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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