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ICAS publishes final Scottish income tax rates and bands

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By The ICAS Tax Team

20 February 2018

Headline figures:

  • The Scottish Parliament has confirmed that there will be five tax bands for Scottish taxpayers in 2018/19.
  • The Scottish higher rate threshold for 2018/19 has now been set at £43,430.
  • A Scottish taxpayer with earnings of £47,000 is paying £794 more income tax than a UK taxpayer outside Scotland.

Today the Scottish Parliament confirmed there will be five tax bands for Scottish taxpayers in 2018/19.

Commenting on the Scottish rate resolution Charlotte Barbour, Director of Taxation at ICAS, said: “While the measures provide a marginally more progressive tax take, they will also introduce some operational issues around tax relief at source mechanisms such as with pension relief.”

Five tax bands

From 6 April 2018, Scottish taxpayers will pay tax by reference to five income bands as opposed to three in the rest of the UK.  The new rates and bands for 2018/19 are set out in the following table:


Band Name

Band Width £

Band Rate

Starter Rate

11,850-13,850

19%

Basic Rate

13,851 – 24,000

20%

Intermediate Rate

24,001 – 43,430

21%

Higher Rate

43,431 – 150,000

41%

Top Rate

£150,001 +

46%


The north-south divide

Instead of £44,273, as Scottish Finance Secretary Derek Mackay had proposed in the draft Scottish Budget for 2018/19, the Scottish higher rate threshold for 2018/19 will be set at £43,430.  This compares with a threshold of £46,350 south of the border.

To take an example, in 2017/18 a Scottish taxpayer with earnings of (say) £47,000 is paying £400 more income tax than a UK taxpayer outside Scotland. Following the Scottish Budget in December, this differential was expected to increase to £625 in 2018/19.  However, as a consequence of today’s rate resolution, it is now £794.

How do the income tax bands stack up?


Earnings

Scottish Tax Liability in 2018/19

Difference in Scotland between 2017/18 and 2018/19

Difference with rest of UK for 2018/19

£15,000

£610

£90 more in your pocket in 2018

Scots £20 better off

£24,000

£2,410

£90 more in your pocket in 2018

Scots £20 better off

£26,000

£2,830

£70 more in your pocket in 2018 – due to UK personal allowance increase

Scots no better or worse off

£30,000

£3,670

£30 more in your pocket in 2018

Scots £40 worse off

£33,000

£4,300

No difference

Scots £70 worse off

£60,000

£13,284

£184 less in your pocket in 2018

Scots £924 worse off

£90,000

£25,584

£484 less in your pocket in 2018

Scots £1,224 worse off


Edinburgh_Skyline

Scots to pay more tax than expected

By Donald Drysdale for ICAS

20 February 2018

2022-11-mitigo 2022-11-mitigo
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