From 6 April 2018 Scottish taxpayers are subject to the new Scottish rates of income tax. Scottish income tax applies to “earned income”.

The new tax rates for Scottish taxpayers from 6 April 2018 are as follows:

  • 19% (starter rate): applied to the first £2,000 of income above £11,850 (personal allowance 2018-19)
  • 20% (basic rate): £13,851 to £24,000
  • 21% (intermediate rate): £24,001 to £43,430
  • 41% (higher rate): £43,431 to £150,000
  • 46% (additional rate): over £150,000.

Other changes and reliefs to look out for include:

  • Dividend allowance – the tax free allowance will fall from £5,000 to £2,000.
  • Transferable marriage allowance – this relief is only available if one spouse is a non-taxpayer and the other is a basic rate taxpayer.
  • Gift Aid relief – Higher rate tax relief will be available for those who pay tax over 20%. Taxpayers at 19% should ensure they have paid enough tax to avoid an unexpected bill on Gift Aided contributions.
  • Personal pension relief – Higher rate tax relief will be available to those paying rates higher than 20%. Scottish taxpayers can claim an additional 1% relief if they are 21% taxpayers. This can be claimed via the self-assessment return. Scottish higher/additional rate taxpayers can claim the additional 21% or 26% relief via the tax return also. Taxpayers at 19% can also claim 20% tax relief.

Scottish taxpayers, other than those with straightforward affairs, will find their tax calculation is complicated due to the multiple rate bands. Those with significant investment income, multiple employments and/or pensions may need reassurance that their overall tax figure is correct.