Income tax and the level at which this is set is something that affects households across Scotland.
In recent months, the Scottish Government has said it will be making changes to this with a new higher band set to be introduced in April.
If you're interested in learning more about income tax in Scotland, how it differs from the rest of the UK and the changes being set out, look no further.
What are the current income tax bands in Scotland?
Deputy First Minister @ShonaRobisonMSP presents #ScotBudget to @ScotParl today.
— Scottish Government (@scotgov) December 19, 2023
This budget prioritises:
🔵protecting public services
🔵funding key missions on equality, opportunity, community
🔵investing in services and infrastructure
Watch at https://t.co/zWDxp2N6pM pic.twitter.com/sH8RJHBniN
There are five tax bands in Scotland with earnings of up to £12,570 not being taxed.
Income between £12,571 and £14,732 is taxed at 19%, while income between £14,732 and £25,688 is taxed at 20%.
The Intermediate Rate (£25,689 to £43,662) is set at 21% while the Higher Rate (£43,663 to £125,140) is 42%.
Those in the highest bracket pay 47%, with this only applying to those earning over £125,140.
How does income tax differ between Scotland and the rest of the UK?
Much like Scotland, income of up to £12,570 is not taxed with those earning between £12,571 to £50,270 being taxed at 20%.
Those on the Higher Rate (£50,271 to £125,140) are taxed at 40% while those on the Additional Rate (over £125,140) are taxed at 45%, according to the UK Government website.
Today, the Deputy First Minister will announce the #ScotBudget at @ScotParl.
We are prioritising funding to invest in public services and support our key missions of equality, community and opportunity. @ShonaRobison visited @LarderTraining ahead of today's budget. pic.twitter.com/xtfVcFsoGp
— Scottish Government (@scotgov) December 19, 2023
How will the proposed income tax changes in Scotland affect me?
The Scottish Government states that income tax changes being introduced from April 6 will see those paying the Starter Rate (19%) change to include those earning between £12,571 and £14,876 (previously £12,571 and £14,732).
There will also be a change to the Basic Rate (20%) with those earning between £14,877 and £26,561 (previously £14,733 and £25,688) being asked to pay this.
Those earning between £26,562 and £43,662 (previously £25,689 and £43,662) will be asked to pay the 21% Intermediate Rate.
Those paying the Higher Rate of 42% will earn between £43,663 and £75,000 (previously those earning between £43,663 and £125,140).
People with earnings over £28,850 in Scotland, slightly above median earnings, pay more income tax than they would in the UK. The latest policy decisions widen the gap further for those earning over £75,000 (the top 5 per cent of taxpayers). pic.twitter.com/cXIqC28Lno
— Scottish Fiscal Commission (@scotfisccomm) December 19, 2023
A new Advanced Rate will also be introduced at 45% and affect those earning between £75,001 and £125,140.
The Top Rate affecting those earning over £125,140 will rise by 1% to 48%.
See the full tax bracket breakdown here:
- Starter rate: £12,571 - £14,876, taxed at 19%
- Basic rate: £14,877 - £26,561, taxed at 20%
- Intermediate rate: £26,562 - £43,662, taxed at 21%
- Higher rate: £43,663 - £75,000, taxed at 42%
- Advanced rate: £75,001 - £125,140, taxed at 45%
- Top rate: Above £125,140, taxed at 48%
The Scottish Government states that 36% of Scottish adults are unaffected by the changes.
Only those earning "significantly above median taxpayer income in Scotland" (£28,200) will pay more tax in 2024/2025.
Those earning less than £28,850 (51% of Scottish taxpayers) will pay slightly less income tax than elsewhere in the UK.
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