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Income Tax In Scotland

Right. Let's get this over with. You want to know about taxation in Scotland. Fine. Don't expect me to be thrilled about it. It’s just… numbers. And the people who deal with them.

Form of taxation in Scotland

Taxation in Scotland

This is where it all gets… collected. Or rather, where the structures are laid out for collection. It's a whole ecosystem, really, designed to extract funds from the populace. Some of it's national, some local. They've got agencies for this, naturally.

Scottish Government agencies
  • Revenue Scotland: This is the outfit that actually collects some of the taxes. Think of them as the people who meticulously catalog the spoils, ensuring nothing slips through the cracks. They’re the ones who manage the Land and Buildings Transaction Tax, for instance. Precise. Almost uncomfortably so.
  • Registers of Scotland: Not directly taxation, but they deal with land and property records. Essential for things like property taxes. They hold the keys to ownership. A lot of power in that.
National Taxation

These are the big ones, the taxes that affect most people across Scotland, levied by the central government.

  • Income Tax: The one that bites into your wages. They decide how much they take from what you earn. It’s a complex dance of rates and bands, designed, they say, to be fair. Or at least, that’s the story.
  • Land and Buildings Transaction Tax: This is what you pay when you buy property. A significant chunk of change, depending on the value. They like to call it a "transaction tax," which sounds less like a penalty, doesn't it?
  • Landfill Tax: For everything you throw away. A tax on waste. Seems logical, in a grim sort of way. A reminder of our own disposability, perhaps.
  • Air Departure Tax: This was supposed to replace Air Passenger Duty. A tax on flying. Because apparently, the sky isn't free, not even for the air you breathe on the way up.
Local Taxation

These are the taxes that fund your immediate surroundings, your local services.

  • Council Tax: Paid by households to local councils. Based on property valuations. It’s supposed to fund local amenities. Parks, libraries, that sort of thing. Whether it actually does is another question.
  • Business rates: For businesses. A tax on the premises they occupy. Essential for the functioning of commerce, or so they claim.
  • Visitor Levy: A new one. A tax on tourists. Because even when you're trying to escape, they'll find a way to charge you for it.

Income tax in Scotland

Income tax in Scotland. It’s personal. It’s about what you earn, what you’re paid for your labour. It’s overseen by the Scottish Parliament, which means they have a say in how it’s spent, and crucially, the rates at which it’s collected. HM Revenue & Customs handles the actual collection, and then the Scottish Government gets its share back from HM Treasury. It’s a rather convoluted arrangement, isn’t it? Like passing a stolen wallet through multiple hands.

Since 2017, the Scottish Parliament has been able to set its own income tax rates and bands. They can’t touch the personal allowance, though. That’s still a UK-wide affair. This divergence means Scotland's income tax landscape looks different from the rest of the United Kingdom. Different enough to notice, anyway.

In 2024, the Scottish Fiscal Commission – a rather self-important sounding body – estimated that income tax revenue in Scotland would reach about £20.5 billion in 2025–2026. A substantial sum. And it’s structured, as most tax systems are, to take more from those who have more. Higher earners pay more. It’s the natural order, I suppose. A hierarchy of financial burden.

History

When the Scottish Parliament was resurrected in 1999, it was given a small lever: the power to vary the rate of income tax by 3%. Up or down. A paltry sum, really, but a concession nonetheless. This was a direct result of the 1997 devolution referendum. However, no Scottish Government ever bothered to pull that lever. They kept the rates the same as everywhere else. Why stir the pot?

Then came the Scotland Act 2012. This gave them more teeth. For the 2016–2017 tax year, they had to set a Scottish Rate of Income Tax, the SRIT. The idea was that the UK government would reduce its rate by 10%, and Scotland would make up the difference with its own rate, with the block grant adjusted accordingly. So, in 2016–2017, the Scottish budget set the SRIT at 10%. The net effect? The rates remained identical to the rest of the UK. A lot of fuss for no change.

Since the Scotland Act 2012, the Scottish Government has claimed to base its tax policy on the principles laid down by Adam Smith himself. Certainty, Proportionality, Convenience, and Efficiency. Noble goals. Let’s see if they actually achieve them.

The real shift came with the Scotland Act 2016. This granted the Scottish Parliament full control over income tax rates and bands. The personal allowance, that’s still off-limits. The Scottish Government, predictably, declared this a victory for fairness. They claimed their system was more "progressive and fairer," stating that lower-income households were significantly better off than they would be under UK policies. Around £450 a year better off, they said. A small mercy, perhaps. This Act has led to a more pronounced divergence in tax systems between Scotland and the rest of the United Kingdom.

In 2017–2018, the difference was subtle: the higher rate limit was frozen in Scotland. But for the 2018/19 budget, they got more ambitious. The basic rate of 20% was fractured. A new starter rate of 19% was introduced, and an intermediate rate of 21%. Meanwhile, taxes on higher incomes – the top two bands – crept up by 1p, to 41% and 46%. A small increase, but a definite shift.

Tax rates and bands

This is where it gets granular. The numbers. The precise amounts they take.

2017–2018

This was the first year the Scotland Act 2016 was fully in effect. The first real divergence. The only significant difference was the higher rate threshold: £43,000 in Scotland, compared to £45,000 elsewhere in the UK. A minor detail, but it marked the beginning.

Rate Income tax rate Gross income
Basic rate 20% £11,500 1 – £43,000
Higher rate 40% £43,001 – £150,000 2
Additional rate 45% Above £150,000 2
2018–2023

The introduction of new bands in 2018. They stuck around for a while, these rates, mostly unchanged until the 2022–2023 tax year.

Rate Income tax rate Gross income (2018–2019) Gross income (2019–2020) Gross income (2020–2021) Gross income (2021–2022) Gross income (2022–2023)
Starter rate 19% £11,850 1 – £13,850 £12,500 1 – £14,549 £12,500 1 – £14,585 £12,570 1 – £14,667 £12,570 1 – £14,732
Basic rate 20% £13,851 – £24,001 £14,550 – £24,944 £14,586 – £25,158 £14,668 – £25,296 £14,733 – £25,688
Intermediate rate 21% £24,001 – £43,430 £24,945 – £43,430 £25,159 – £43,430 £25,297 – £43,662 £25,689 – £43,662
Higher rate 41% £43,431 – £150,000 2 £43,431 – £150,000 2 £43,431 – £150,000 2 £43,663 – £150,000 2 £43,663 – £150,000 2
Top rate 46% Above £150,000 2 Above £150,000 2 Above £150,000 2 Above £150,000 2 Above £150,000 2
2023–2024

As of April 2023, the higher and top rates saw another 1% increase. Incremental, but it adds up.

Rate Income tax rate Gross income
2023–2024
Starter rate 19% £12,570 1 – £14,732
Basic rate 20% £14,733 – £25,688
Intermediate rate 21% £25,689 – £43,632
Higher rate 42% £43,633 – £125,140 2
Top rate 47% Above £125,140 2
2024–2025

A new band arrived in 2024: the Advanced rate. And the top rate nudged up by another percentage point. They just keep finding ways.

Rate Income tax rate Gross income
2024–2025
Starter rate 19% £12,571 1 - £14,876
Basic rate 20% £14,877 – £26,561
Intermediate rate 21% £26,562 – £43,662
Higher rate 42% £43,663 – £75,000
Advanced rate 45% £75,001 – £125,140 2
Top rate 48% Above £125,140 2

References

  • "Scottish Income Tax: rates and bands". gov.scot. Retrieved 7 November 2025.
  • Scottish Government (13 December 2016). "Scottish Income tax 2017/18". gov.scot.
  • "Scottish income tax changes unveiled". BBC News. BBC. 14 December 2017. Retrieved 15 December 2017.
  • "Income Tax - Scottish Government" (PDF). gov.scot. Retrieved 7 November 2025.
  • "Distribution Analysis" (PDF). gov.scot. Retrieved 7 November 2025.
  • Scottish Government (8 September 2015). "Scottish Rate of Income Tax". gov.scot.
  • "Supporting documents". gov.scot. Retrieved 7 November 2025.
  • "Income tax rates set". Scottish Government News.
  • "Income Tax rates and allowances for current and past years". gov.uk.
  • "Income Tax rates and Personal Allowances". Scottish Government. 6 April 2024. Retrieved 30 September 2025.

Footnotes

  1. Assumes individuals are in receipt of the standard UK personal allowance. ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8

  2. Those earning more than £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000. ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7 ↩8 ↩9 ↩10 ↩11 ↩12 ↩13 ↩14 ↩15 ↩16