Income Tax
The Scottish Parliament has the power to set the Income Tax rates and bands for the non‑savings, non‑dividend income of Scottish taxpayers.
Responsibility for the remainder of the Income Tax system, which includes all reliefs and exemptions, as well as setting the UK‑wide Personal Allowance and its associated taper rate, are reserved to the UK Parliament. Income Tax on savings and dividends income is also reserved.
Income Tax Policy Proposal: Scottish Budget 2025-2026
Finance Secretary Shona Robison set out the decisions as part of the 2025-2026 Scottish Budget, as she also published Scotland’s Tax Strategy.
The Finance Secretary also committed to freezing the number of tax bands, providing certainty to taxpayers and businesses.
As a result, more than half of taxpayers pay less than they would elsewhere in the UK and the Strategy commits to this being maintained for the remainder of this Parliament.
The Finance Secretary said:
“I have decided to provide tax support for low and medium-income earners.
“The Basic and Intermediate rate thresholds will increase this year by 3.5%, effectively twice the rate of inflation.
“That means more of people’s money will be taxed at the starter and basic rates.
“It also means that the majority of taxpayers in Scotland will continue to pay less income tax than in the rest of the UK. This will remain true until at least the end of this Parliament while, as with the UK, thresholds for Higher, Advanced and Top rates will be maintained at their current levels.
“Overall, the income tax decisions we have taken since devolution have delivered up to £1.7 billion more in 2025-26 than if we had followed UK Government policies.
“Setting out our plans now for the rest of this parliament will provide certainty, allowing taxpayers to better manage their finances and businesses to plan and make investment decisions with confidence.”
- The Starter rate band will increase by 22.6% and the Basic rate band will increase by 6.6%. This will increase the thresholds for paying both the Basic and Intermediate rate of tax by 3.5%.
- This increase is significantly above inflation, which is 1.7%, based on the Consumer Price Index from September 2024.
- The Higher, Advanced and Top rate thresholds will be frozen at their current levels in cash terms to the end of this Parliament (2026-27).
- The UK Government confirmed in the 2024 Autumn Statement that the UK-wide Personal Allowance will remain frozen at £12,570.
*Assumes individuals are in receipt of the standard Personal Allowance.
**Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.
Scottish Income Tax
The following illustrates the Scottish tax bands and rates without the application of the tax free allowance.
PAYadvice.UK 4/12/2024