Tax rates and thresholds approved by Scottish Parliament

23 February 2017

The Scottish Parliament has made history by voting to set separate Scottish income tax rates and bands for the first time.

Members of the Scottish Parliament have passed measures setting all income tax rates and bands as proposed by the Scottish Government in this year’s Budget Bill.

From 6 April 2017, as per the table below, the basic, higher and additional rates of income tax are to stay the same as the rest of the UK (rUK) but the threshold at which people start paying the higher tax rate will remain at £43,000.

 

Income tax rates

Scottish bands

 rUK bands

Scottish Basic rate 20 per cent

Above £11,500* up to £43,000

 Above £11,500* up to £45,000

Scottish Higher rate 40 per cent

Above £43,000 up to £150,000

 Above £45,000 up to £150,000

Scottish Additional Rate 45 per cent

Above £150,000**

 Above £150,000**

* Assumes person is in receipt of the Standard UK Personal Allowance

** Personal Allowance is reduced by £1 for every £2 earned over £100,000

 

The income tax changes will mean people earning more than £43,000 in Scotland will pay up to £400 more than those on the same salary elsewhere in the UK.

The SNP administration had initially planned to raise the threshold for the higher rate only in line with inflation, instead of increasing it to £45,000 as the UK government has done. But in striking a deal with the Scottish Greens to get its budget plans through parliament, the proposed rise was scrapped and the threshold was instead frozen at £43,000.

In a separate move, the Scottish Finance Secretary Derek Mackay also announced extra support for firms affected by business rate rises.