Heather Maitland


The tax gap between Scotland and the rest of the UK continues to widen. Following the Finance Minister’s Scottish budget in December, the Higher Rate Tax threshold in Scotland is to remain frozen this year whilst this threshold will rise considerably for taxpayers in the rest of the UK


This means that from 6 April 2019 Scottish taxpayers will pay Higher Rate tax at 41% on income exceeding £43,430 per annum whilst UK taxpayers will pay 20% and will not become liable to UK Higher Rate tax of 40% until their income exceeds £50,000.


The impact on a Scottish resident taxpayer earning £50,000 will be an additional £1,500 of tax per annum than if they were resident in the rest of the UK.


Scottish Income Tax Rates and Bands

As of 6 April 2019, the income tax rates and thresholds will be as follows:

Income (£) Name Rate (%)
Below £12,500* N/A 0
£12,501** – 14,549 Starter 19
£14,500 – £24,944 Basic 20
£24,945 – £43,430 Intermediate 21
£43,431 – £150,000*** Higher 41
Above £150,000*** Top 46


*No tax is payable on income below the Standard UK Personal Allowance, which is set by the UK Government.

**Assumes individuals are in receipt of the Personal Allowance.

***Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.


The Starter and Basic Rate bands are subject to modest inflation-based increases with the Higher rate and Top rate bands remaining as they are. The rates of tax are unchanged.


National Insurance also to increase

From 6th April, Scottish taxpayers will also see their liability to pay National Insurance (“NI”) increase. NI is still set by and paid to the UK Government, and whilst the primary rate for employees remains unchanged at 12%, this will now be payable on earnings up to £50,000 per annum because the upper threshold is aligned to the UK Higher Rate tax threshold.


As a consequence, the combined rate of Tax and NI in Scotland on earnings between £43,430 and £50,000 will be 53% compared to 32% for the rest of the UK!