ICAS publishes final Scottish income tax rates and bands

ICAS crunches the budget numbers
By The ICAS Tax Team

20 February 2018

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


Topics

  • Media releases
  • Tax

Previous Page