Scottish Income Tax and National Insurance

If you live in Scotland, you’ll pay a different rate of tax – called the ‘Scottish rate of Income Tax’. Scottish Income Tax applies to your wages, pension and most other taxable income. You’ll still pay the same rate of tax on dividend income and savings interest as the rest of the UK.

How do I know if I need to pay Scottish Income Tax?

Only taxpayers whose main home is in Scotland pay Scottish Income Tax.

HM Revenue & Customs (HMRC) will decide whether you’re a Scottish taxpayer, based on where your main residence is.

Your main home is usually where you live and spend most of your time. It doesn’t matter whether you own it, rent it or live in it for free.

If you live anywhere else in the UK, you won’t pay Scottish Income Tax.

Do you move to or from Scotland during the tax year? Then you’ll be a Scottish taxpayer if you live in Scotland for at least as much of the tax year as you live in any other country in the UK.

How does the Scottish Income Tax work?

Like in the rest of the UK, Scottish Income Tax is made up of different bands. This means as your income increases, so does the amount of Income Tax you pay.

The Scottish Parliament set the Income Tax rates and bands for Scottish taxpayers.

The money collected from Scottish Income Tax will be taken by HMRC and paid to the Scottish Government.

How much Income Tax will I pay?

The rate of Income Tax you pay on your income
Income
Income Tax bands 2021/22

£0 to £12,570*

Zero rate: 0%

£12,571 to £14,667

Starter rate: 19%

£14,668 to £25,296

Basic rate: 20%

£25,297 to £43,662

Intermediate rate: 21%

£43,663 to £150,000

Higher rate: 41%

Over £150,000**

Top rate: 46%

 

* Assuming you’re getting the Standard UK Personal Allowance of £12,570, which will also apply to Scotland.

** If you earn above the threshold, your Personal Allowance is reduced by £1 for every £2 you earn above it – until it reaches £0.

Remember, you don’t pay Income Tax at the same rate on all your income. You only pay the rate of Income Tax on your income in the bracket. For example, if you earn £52,000 a year, the Income Tax you’ll pay works out like this:

Income
Income Tax band
Tax you pay

Up to £12,570

Zero rate

No Income Tax on first £12,570

£12,571 to £14,667

Starter rate

19% Income Tax on next £2,096

(£14,667-£12,571 = £2,096)

£14,668 to £25,296

Basic rate

20% Income Tax on next £10,628

(£25,296-£14,668 = £10,628)

£25,297 to £43,662

Intermediate rate

21% Income Tax on the next £18,365

(£43,662-£25,297 = £18,365)

£43,663 to £150,000

Higher rate

41% Income Tax on next £8,337

(£52,000-£43,663 = £8,337)

Over £150,000

Top rate

No Income Tax paid at this rate

Calculate your income tax and National Insurance contributions on the GOV.UK website

If you think you might have had Income Tax wrongly taken from your earnings, fill in the R38 form from HMRC to claim it back.

What is my Scottish Tax code?

Your tax code is usually the amount you can earn without paying tax, divided by 10, with a letter Your tax code will start with an ‘S’ if you’re a Scottish taxpayer.

For example:

Tax code: S1257L

1257 becomes £12,570 earned before tax.

To make sure you’re on the right tax code, check your code matches the Personal Allowance you should be getting.

If you think your tax code is wrong, or if you’re in any doubt, contact HMRC. Contact details for HMRC are on the GOV.UK website

It’s important you give HMRC all the information they ask for so you don’t end up on the wrong tax code and pay too much or too little tax.

To sort out a tax problem, contact HMRC. Contact details are on the GOV.UK website

Or call HMRC on 0300 200 3300*.

* Lines are open Monday to Friday, 8am to 8pm, Saturday 8am to 4pm, Sunday 9am to 5pm. Call charges apply, find out more on GOV.UK

National Insurance

National Insurance contributions rates will remain the same in Scotland, and in line with the rest of the UK.

National Insurance contributions help build your entitlement to certain state benefits. For example, the State Pension and Maternity Allowance.

Tax if you’re self employed

If you’re self-employed and live in Scotland, your Income Tax the same rate as everyone else – but you pay it a year in arrears through Self Assessment.

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