Scottish Income Tax 2018/2019
On 14th December 2017 the Scottish Government proposed in the Scottish Budget new Income Tax bands for Scottish income tax payers. If these bands are approved then the new rates will come in to affect on 6th April 2018.
A Scottish income tax payer is an individual whose main residence is in Scotland as determined by HMRC. If HMRC have old address details for an individual then they must be notified of any changes.
| Scottish Bands | Band Name | Scottish Rate (%) |
|---|---|---|
| Over £11,850 - £13,850 | Starter | 19 |
| Over £13,850 - £24,000 | Basic | 20 |
| Over £24,000 - £44,273 | Intermediate | 21 |
| Over £44,273 - £150,000 | Higher | 41 |
| Above £150,000** | Top | 46 |
Some things do remain the same as the rest of the United Kingdom with individuals’ personal allowance still being £11,850 and individuals who have an adjusted net income over £100,000 their personal allowance will be reduced by £1 for every £2 over £100,000. This would mean that any individual with earnings of £123,700 or over will lose their whole personal allowance and be taxed on their whole income.
It is worth noting that individuals with earnings of £123,700 can make pension contributions to reduce their adjusted net income on order to receive a lower reduction of personal allowance or a full personal allowance.
For example:
Mr Jones has earnings of £130,000 meaning he will not receive a personal allowance. By making a gross pension contribution of £30,000 into a SIPP Mr Jones’ adjusted net income will be £100,000 which will now entitle him to the full personal allowance.
What we do not know at this point is how this will affect the mechanics of tax relief for Scottish pension savers. HMRC is aiming to inform all Pension Providers by the end of January 2018 so that the correct tax relief can be claimed from the 2018/2019 tax year.
