Scottish rate of tax

Published 27th March 2017

If you live in Scotland on 5th April 2017 you will start to pay higher rate tax sooner than in the rest of the UK, but the new tax bands for Scotland do not apply to National Insurance Contributions or to Capital Gains Tax or to income from savings and investments, so Scottish residents will have to have two calculations if their income exceeds £43,000. For more information click here.

The point at which a taxpayer goes from paying 20% to 40% in Scotland will be where the income exceeds £43,000, whereas in the rest of the UK it will be £45,000. But this only applies to earned income. The UK bands still apply to National Insurance, income from savings and investments and to Capital Gains Tax where the rate of tax changes when income exceeds £45,000. So all Scottish residents will need one calculation for earned income and another for all other income and gains.

To add insult to injury it means that an employee with £45,000 earned income living in Scotland will pay 40% income tax on the excess over £43,000 plus 12% National Insurance (which applies in the whole of the UK) up to £45,000. A total of 52% on the income between £43,000 and £45,000.

The newsletters on this website are believed correct at the time of publication. They may not include subsequent changes in the law. If the subject matter is of interest you should contact us to see if there is a relevant update.

Taxation is a complicated subject and is subject to change. This article is provided for general guidance only. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article.

Landlords Tax Services Ltd, specialises in the taxation of residential property income and gains and around half its clients are resident outside the UK. If you would like specialist help contact Maurice Patry F.C.A. at or for more information visit our website at Landlords Tax Services Ltd