Scottish Taxes
If your main home is in Scotland, you pay Income Tax at up to six different rates: 0%, 19%, 20%, 21%, 41%, and 46%, on any of your income which doesn’t come from dividends or savings. Your interest, dividends and gains are taxed at the rates and in the tax bands applicable in the rest of the UK.
The Scottish tax bands are not aligned with the National Insurance Contribution (NIC) thresholds, which leads to some very high marginal rates for Scottish residents, as shown in the table.
The NIC rates are different for selfemployed individuals, and don’t apply for those over state pension age. The high marginal rate between £100,001 and £125,000 arises because the Personal Allowance is withdrawn by £1 for every £2 of additional income in that band.
If you live in Scotland and plan to take taxable income from your pensions or pay yourself a bonus, be very careful not to push your income into a band where it is taxed at 53% or 63.5%.
| Employee in Scotland in 2020/21 | |||
|---|---|---|---|
| Income in band £ |
Scottish tax % |
NIC % |
Total rate on band % |
| 0 – 9,500 | 0 | 0 | 0 |
| 9,501 – 12,500 | 0 | 12 | 12 |
| 12,501 – 14,585 | 19 | 12 | 31 |
| 14,586 – 25,158 | 20 | 12 | 32 |
| 25,159 – 43,430 | 21 | 12 | 33 |
| 43,431 – 50,000 | 41 | 12 | 53 |
| 50,001 – 100,000 | 41 | 2 | 43 |
| 100,001 – 125,000 | 61.5 | 2 | 63.5 |
| 125,001 – 150,000 | 41 | 2 | 43 |
| Over 150,000 | 46 | 2 | 48 |
| Action Point! |
|---|
| Check what tax rate will apply on any extra income you plan to take. |
