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Scottish Income Tax - 2017/18 rates to come into force

2nd April 2017

The new powers over Scottish Income Tax will come into force next week.

Rates have been frozen and the threshold at which people start paying the higher tax rate will remain at £43,000.

Finance Secretary Derek Mackay said:"This is a truly historic time for Scotland as the new Scottish Income Tax powers come into force - and another example of how the Scottish Government is putting newly-devolved powers to good use in making Scotland fairer and supporting public services.

"In implementing these changes, we are putting fairness, equality and the ability to pay at the heart of our tax system. That is why, under these changes, 99% of Scottish taxpayers will pay no more tax in 2017/18 than they did last year when earning the same wage.

"Focused on the needs and priorities of Scotland, the changes coming into force next week will raise an additional £107 million to support our public services in 2017/18, continuing to make Scotland an attractive place to live, work and do business."

The main change in rates is the new 45% rate for those earning over £150,000 taking Scotland out of line with England.

Scotland is now a higher tax paying country for income tax than England.

Scottish Income Tax rates and bands 2017-18

Scottish income tax rate

Scottish Bands

Scottish Basic rate 20%

Over £11,500* - £43,000

Scottish Higher rate 40%

Over £43,000 - £150,000

Scottish Additional Rate 45%

Over £150,000 and above**-

* Assumes you are in receipt of the Standard UK Personal Allowance

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

For more details on the Scottish rate of tax see - https://www.gov.uk/scottish-rate-income-tax.

What other financial powers are going to Holyrood?

In April 2017, the Scottish Parliament will receive a package of powers. These include;

power to set the rates and bands of income tax on non-savings and non-dividend income

half the share of VAT receipts in Scotland being assigned to the Scottish government's budget

power over Air Passenger Duty and Aggregates Levy

The formal transfer of those powers from Westminster to Holyrood has now taken place.

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