23 November 2018

Scottish Income Taxes – A date for your diaries - 12 December 2018

With the Scottish Budget looming, we look at the comparisons in taxable income between the UK and Scottish taxpayers

The UK budget was announced on 29 October 2018 detailing UK tax rates and bands for the 2019/20 tax year, which commences on 6 April 2019.  In Scotland we still await the Scottish Budget on 12 December 2018, to hear more from Derek Mackay, Scottish Finance Minister, on the 2019/20 income tax rates and bands for Scottish Taxpayers.

The 2017 Scottish budget introduced complexities to the income tax system for Scottish Taxpayers with four extra tax rates coming into effect on 6 April 2018.  For Scottish taxpayers the Scottish rates and bands apply to non-savings income only (i.e. employment/self-employment/pension/property income).  However, the UK rates will continue to apply to Scottish tax payers on both savings and dividend income.  “Tax doesn’t have to be taxing”, said no Scottish Taxpayer ever!

The Scottish income tax rates in the 2018/19 (current) tax year means that Scottish taxpayers earning in excess of £33,000 are paying more income tax than their UK counterparts (let’s call them rUK taxpayers).

The recent UK Budget increased the band at which higher rate taxes begin to £50,000 for 2019/20.  Currently that same number in Scotland is £43,430.

Below is a comparison of the 2019/20 income tax payable by both rUK and Scottish Taxpayers on ‘non-savings income’ assuming that the Scottish Government continue to apply the Scottish 2018/19 rates in 2019/20, albeit adopting the UK personal allowance of £12,500:-

Earnings Scottish Taxpayer –
Income tax payable
rUK Taxpayer –
Income tax payable
Difference
  £ £ £
£20,000 1,480 1,500 (20)
£40,000 5,634 5,500 134
£60,000 13,018 11,500 1,518
£100,000 29,418 27,500 1,918

We await 12 December 2018 with baited breath!

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