Scottish Income Tax

Since 2017, the Scottish Parliament has set its own Income Tax rates and bands for non-savings, non-dividend income — that is, income from employment, self-employment, pensions, and rental income. Savings and dividend income are taxed at UK-wide rates regardless of where you live. If you are a Scottish taxpayer, you pay Scottish Income Tax on your earned income, while taxpayers in England, Wales, and Northern Ireland pay UK rates. This guide explains the Scottish rates and how they differ from the rest of the UK.

Who Is a Scottish Taxpayer

You are a Scottish taxpayer if your main place of residence is in Scotland. HMRC determines this based on where you live for the most of the tax year. If you live in Scotland for at least part of the year, you may be a Scottish taxpayer for the whole year. Your employer uses a special tax code prefix — an S before your tax code (for example, S1257L) — to show that Scottish rates apply. If you split your time between Scotland and another part of the UK, check HMRC's guidance on the Scottish taxpayer status. Changing your address with HMRC updates your tax code automatically.

Scottish Income Tax Rates and Bands (2026/27)

For 2026/27, the Scottish rates and bands are as follows. The Starter Rate of 19% applies to taxable income from £12,571 to £15,216. The Scottish Basic Rate of 20% applies from £15,217 to £27,098. The Intermediate Rate of 21% applies from £27,099 to £43,662. The Higher Rate of 42% applies from £43,663 to £75,000. The Top Rate of 48% applies on taxable income above £75,000. These bands are for taxable income (after deducting your Personal Allowance of £12,570). The Personal Allowance taper at £100,000 applies in Scotland just as it does in the rest of the UK.

How Scottish Tax Differs from rUK

In England, Wales, and Northern Ireland, the rates for 2026/27 are simpler: 20% basic rate (income from £12,571 to £50,270), 40% higher rate (from £50,271 to £125,140), and 45% additional rate (over £125,140). Scotland's bands are narrower and the higher rates start at lower income levels — the Scottish higher rate of 42% kicks in at £43,663, compared with £50,270 in England. However, Scotland also has a lower starter rate (19%) on the first slice of taxable income. The net effect: lower-income Scottish taxpayers may pay slightly less than their English counterparts, while middle and higher earners typically pay more in Scotland. The Scottish Government uses the additional revenue to fund public services in Scotland.

How Scottish Tax Is Collected

If you are employed, Scottish Income Tax is collected through PAYE using the S-prefix tax code. Your employer applies the Scottish rates to your pay. If you are self-employed and file a Self Assessment tax return, you must indicate that you are a Scottish taxpayer in the relevant section of the return. HMRC's online system then applies the Scottish rates to your self-employed profits. If you have both employment and self-employment income, the Scottish rates apply to your total non-savings, non-dividend income. HMRC checks your address on file to determine your taxpayer status. If HMRC gets it wrong, you can challenge the decision through your personal tax account.

Savings and Dividends in Scotland

Your savings income (bank interest, bond interest) and dividend income are taxed at the UK-wide rates, not Scottish rates. The Personal Savings Allowance, the Starting Rate for Savings, and the Dividend Allowance all work the same for Scottish taxpayers as for the rest of the UK. Scottish taxpayers also pay the same rates of Capital Gains Tax and National Insurance as the rest of the UK. The Scottish Parliament only controls the rates and bands for non-savings, non-dividend Income Tax.

Practical Example

Angus lives in Glasgow and earns £45,000 from his job. After his Personal Allowance of £12,570, his taxable income is £32,430. Under Scottish rates: he pays 19% on £2,646 (Starter band), 20% on £11,881 (Basic band), 21% on £16,565 (Intermediate band), and 42% on £1,338 (the portion in the Higher band). His total Scottish Income Tax is approximately £7,236. If Angus lived in England, his tax would be approximately £6,486 on the same income. This illustrates the higher tax burden for middle earners in Scotland.

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