Scottish Income Tax And National Insurance

If you live in Scotland, you’ll pay a different rate of tax, called the ‘Scottish rate of Income Tax’. Scottish Income Tax applies to your wages, pension and most other taxable income. You’ll still pay the same rate of tax on dividend income and savings interest as the rest of the UK.

How do I know if I need to pay Scottish Income Tax?

Scottish Income Tax is only payable by taxpayers whose main home is in Scotland.

Her Majesty’s Revenue and Customs (HMRC) will determine whether you’re a Scottish taxpayer based on where your main place of residence is.

Your main home is usually where you live and spend most of your time. It doesn’t matter whether you own it, rent it or live in it for free.

If you live anywhere else in the UK, you won’t pay Scottish Income Tax.

If you move to or from Scotland during the tax year, you’ll be a Scottish taxpayer if you live in Scotland for at least as much of the tax year as you live in any other country in the UK.

How does the Scottish Income Tax work?

The Income Tax rates and bands payable by Scottish taxpayers are set by the Scottish Parliament.

The tax system is based on marginal tax rates. That means it’s worked out as a percentage of income you earn inside certain thresholds – you don’t pay the same rate of tax on everything you earn.

As your income increases, so too does the amount of Income Tax you pay.

The money collected from Scottish Income Tax will be taken by HMRC and paid to the Scottish Government.

How much Income Tax will I pay?

The table below shows the rate of Income Tax you pay on your income.

The Scottish rates and bands for 2018-19
Income band Band name Rates
Up to and including £11,850 Zero rate 0%
£11,851*-£13,850 Starter rate 19%
£13,851-£24,000 Basic rate 20%
£24,001-£43,430 Intermediate rate 21%
£43,431-£150,000 ** Higher rate 41%
£150,001+** Top rate 46%

* Assumes you’re getting the Standard UK Personal Allowance of £11,850 which will also apply to Scotland.

** The Personal Allowance of £11,850 is reduced by £1 for every £2 on income over £100,000. Anyone with income that exceeds £123,700 will not have a personal allowance.

For example, if you earn £45,000 a year, you pay:

  • nothing on the first £11,850
  • 19% (£227.81) on the next £1,199
  • 20% (£2,029.80) on the next £10,149
  • 21% (£4,080.09) on the next £19,429
  • 41% (£643.29) on the next £1,569.

If you think you might have had Income Tax wrongly taken from your earnings, fill in the form from HMRC to have it paid back to you.

Get the R38 form to reclaim tax on GOV.UK, or contact HMRCopens in new window.

What is my Scottish Tax code?

Your tax code will start with an ‘S’ if you’re a Scottish taxpayer.

Your tax code is normally the amount you can earn without paying tax, divided by 10, with a letter added.

For example:

Tax code: S1185L

11850 becomes £11,850 earned before tax.

To make sure you’re on the right tax code, check your code matches the Personal Allowance you should be getting.

If you think your tax code is wrong, or if you’re in any doubt, contact HMRC.

It’s important you give HMRC all the information it asks for so you don’t end up on the wrong tax code and pay too much or too little tax.

Call HMRC on 0300 200 3300*** or visit GOV.uk for other ways to get in touch to sort out a tax problem.

*** Lines are open Monday to Friday, 8am to 8pm, Saturday 8am to 4pm, Sunday 9am to 5pm. Call charges apply, find out more on GOV.UK.

National Insurance

National Insurance contributions rates will remain the same in Scotland and in line with the rest of the UK.

National Insurance contributions help build your entitlement to certain state benefits, such as the State Pension and Maternity Allowance.

You begin paying National Insurance once you earn more than £162 a week (this is the amount for the 2018-19 tax year).

The National Insurance rate you pay depends on how much you earn:

  • 12% of your weekly earnings between £162 and £892
  • 2% of your weekly earnings above £892.

Your National Insurance contributions will be taken off along with Income Tax before your employer pays your wages.

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