Starting rate (0%)
|
0 - 5,000
|
Starting rate (0%)
|
0 - 5,000
|
Basic (20%)
|
1 - 37,700
|
Basic (20%)
|
1 - 37,700
|
Higher (40%)
|
37,701 - 150,000
|
Higher (40%)
|
37,701 - 150,000
|
Additional rate (45%)
|
Over 150,000
|
Additional rate (45%)
|
Over 150,000
|
The Scotland Act 2012 gave the Scottish Parliament the power to set the Scottish Rate of Income Tax (SRIT). In due course, SRIT came into effect on 6 April 2016.
The Scotland Act 2016 then built on these powers and allowed the Scottish Parliament the power to set income tax rates and bands that apply to Scottish taxpayers' non-savings, non-dividend income for tax years beginning 2017/18. For 2022/23 the Scottish rates and bands are as follows
Over £12,570* - £14,732
|
Starter Rate
|
19
|
Over £14,732 - £25,688
|
Basic Rate
|
20
|
Over £25,688 - £43,662
|
Intermediate Rate
|
21
|
Over £43,662 - £150,000**
|
Higher Rate
|
41
|
Above £150,000**
|
Top Rate
|
46
|
* Assumes person is in receipt of the Standard UK Personal Allowance
** Personal Allowance is reduced by £1 for every £2 of adjusted net income over £100,000 and can be reduced to nil.
The personal allowance and thresholds and taxes on savings and dividends remain a UK 'reserved' matter. Capital gains tax has not been devolved (nor National Insurance contributions, inheritance tax, or corporation tax).
The starting rate applies to savings income only. If an individual’s taxable non-savings income exceeds the starting rate limit, then the 0% starting rate for savings will not be available. As detailed below, non-savings income takes priority over savings income in a tax calculation and therefore the 0% starting rate is not available where non savings income exceeds the personal allowance plus £5,000.
From 6 April 2016, the government abolished the dividend tax credit and introduced a dividend nil rate. In 2022/23 the rates of tax on dividend income above the allowance are:
- 8.75% for dividends in the basic rate band
- 33.75% for dividends in the higher rate band
- 39.35% for dividends in the additional rate band
The dividend nil rate in 2022/23 is £2,000.
From 6 April 2016, a tax-free personal savings ‘allowance’ (PSA) of £1,000 was introduced. The amount of PSA depends on adjusted net income. Up to £50,270 the PSA is £1,000, then £500 up to £150,000, then zero. The use of the word ‘allowance’ is misleading as it is, in fact, a zero rate tax band. Adjusted net income is total taxable income before any personal allowances and less certain deductions such as gross gift aid payments and gross relief at source pension contributions.
For the avoidance of doubt, income from an ISA, and income which qualifies for the 0% starting rate for savings will not use up any part of an individual’s PSA.