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Income tax rate rise for Scottish taxpayers
19th December 2023
Taxpayers in Scotland face more income tax than people in other parts of the United Kingdom from next April, following an announcement in the Scottish Budget on income tax rate and band changes.
Adding to the complexity of the tax system and the disparity in the way taxpayers are taxed north and south of the Scottish border, from 6 April 2024 there will now be six rate bands for income tax in Scotland, whilst the rest of the UK has only three.
This makes computing tax in Scotland more difficult and adds to the complexity of such matters as pension contribution tax relief and gift aid calculations.
For tax year 2024/25 onwards, the Starter and Basic rate bands will increase by inflation to £14,876 and £26,561 respectively, but the existing Higher rate threshold and Top rate threshold remain frozen.
The Starter, Basic, Intermediate and Higher rates of income tax will remain unchanged, but there will be a new Advanced rate of 45p applying to incomes over £75,000.
An extra 1p is to be added to the Top rate, increasing it from 47p to 48p on incomes over £125,140.
| Scottish taxpayers non-dividend, non-savings income (per factsheet) | 2024/25 | 2023/24 |
| 0% rate up to | £12,570 | £12,570 |
| 19% starter rate up to |
£14,876 |
£14,732 |
| 20% basic rate up to | £26,561 | £25,688 |
| 21% intermediate rate up to | £43,662 | £43,662 |
| 42% higher rate up to | £75,000 | £125,140 |
| 45% advanced rate up to | £125,140 | N/A |
| 48% / 47% top rate on incomes over | £125,140 | £125,140 |
In comparison, rates and bands of income tax in the rest of the UK for both 2023/24 and 2024/25 are:
- 20% basic rate on taxable income up to £37,700
- 40% higher rate on next slice of income over £37,700
- 45% additional rate on income over £125,140
Download Autumn Statement 2024/25 Tax Tables (pdf)
(Where a Sottish taxpayer receives dividends or savings income, the rates remain the same as the rest of the UK.)
This divergence between higher earners in Scotland and the rest of the UK increases the tax burden for those living north of the border, and it is possible that this may increase further in a pre-election, tax cutting, Spring Budget from Jeremy Hunt.
The Scottish government may be faced with having to reconsider the tax rate changes in response to the Spring Budget, but it would have little time to do so before the 6 April.
The date of the Spring Budget has been set as 6 March 2024.
Further information
If you would like to discuss how these changes may affect you and/or your business, please contact your usual Bishop Fleming advisor.
