ICAS publishes final Scottish income tax rates and bands
Today the Scottish Parliament confirmed there will be five tax bands for Scottish taxpayers in 2018/19.
Main points:
- 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.
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 |
Categories:
- Tax
